According to a report by comparison site, US-based Citigroup is among those most likely to feel the effects of a regulatory crackdown on deferred-interest credit cards.

The cards allow customers to borrow without interest for a period, usually six or 12 months, but charge them the foregone interest retroactively if they fail to pay off their card’s balance within the agreed period.

Several branded credit cards, including those issued by the likes of Apple, Walmart and Best Buy, feature deferred interest.

Sonia Garrison, research manager for CardHub’s mother company, Evolution Finance, said:"I think most people see the very large print 0% interest, or no payments for 12 months, and that’s very enticing."

However, as the report stated, deferred interest differs from 0% financing in the possibility of the customer being charged interest.

"Often the smaller print is where you’ll find the information about the high interest rates being applied to the full balance," she added.

In October 2013, the US’s Consumer Finance Protection Bureau revealed it would debate whether regulatory action was appropriate, saying it questioned customers’ ability to fully understand the conditions of deferred-interest credit cards.

The Bureau found that 20% of users fail to repay balances on their credit cards before the retroactive interest charges kick in.

CardHub revealed that among the 22 deferred-interest cards offered by large retailers, eight of them are provided through Citi or one of its subsidiaries.

The move would also damage General Electric, who provide seven of the deferred-interest services, and Comenity Bank, who issues cards for retailers True Value, Victoria’s Secret and Pottery Barn, as well as Capital One Financial (COF), card issuer for retailers Menards and Kohl’s.

Barclays PLC and WeBank both issue deferred-interest cards for retailers on CardHub’s list.

Further, according to the report, in regards to clarity of their cards’ terms and conditions, Pottery Barn, Lowe’s and Amazon were among the lowest scoring.


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