Zero percent only if you pay in full by the deadline. In many "zero-interest" programs, you do not have to pay interest for a period of time (say twelve months). But if you do not pay off the full purchase in those 12 months, you will be charged interest on the entire purchase amount dating back to the purchase date. So even if you have paid off most of the balance, you will pay interest on the whole loan. The interest rate charged by the store can be 20 percent or more. This is higher than most bank credit cards. If you take a promotion like this, be sure you pay in full by the end of the promotion period.

Interest paid but rebated. In some no interest programs, your payment each month does include an interest charge. If you make all of your payments on time and pay off the entire purchase price by the agreed-upon date, the interest you have paid is credited back to you. If you miss a payment, pay late one month or do not pay off the whole balance by the end of the agreed upon period, you don't get your rebate.

Inflated prices. Some stores offer "no-interest" financing but inflate the selling price to make up the difference. A recent advertisement from a large appliance chain offered a choice: no interest for six months or $150 off the purchase price. Another chain offered comparable 35-inch televisions: $1,499 with no interest for 15 months, or a similar TV for $999 without the no-interest offer.