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Mar 11, 2009 -- Banning retroactive interest charges on No/No/No plans
"No/No/No plans" will soon get a makeover thanks to new rules from the Federal Reserve.
Clark has received numerous complaints about these kinds of financing plans that promise "no payment, no down payment and no interest until (fill in the blank with a year of your choice)."
What most people don't know is that the interest usually becomes retroactive to the original date of purchase if you don't pay the bill in full before it comes due.
But the Federal Reserve's new rules, which go into effect July 2010, will ban the retroactive interest charge -- unless the full and final interest rate is clearly disclosed at the time of purchase.
The new rules are already putting a big crimp on the market. Retailers typically count on those who get stuck paying retroactive interest on "no, no, no" plans to subsidize their loss on those customers who pay the note in full in a timely manner.
Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.
A lot of high quality companies do this to encourage larger item sales. Home dept credit cards do this automatically if you purchase a large ticket item like a kitchen appliance. It is easy to assume it is the same as the regular credit card interest rate.
fine print
people know if it sounds too good to be true it usually is, so smart people look for the catch....it's not hard to find, just hard to read. they print the bait in bold letters, and the hook in print so small you have to bring a magnifying glass...I agree that they ought to require the fine print be enlarged where people can read the complete terms of the deal without straining. All the no,no,no contracts i've seen did have the retro interest rate disclosed (in very fine print) we even used rooms to go once on such a deal...we made sure to have it paid off a month before the bill was due or we would have wound up paying like 24.99% interest componded from the day of purchase....granted the sales people probably don't mention this nasty fact and will not mention the fine print terms in their sales pitch....so i don't see this putting a crimp in these sales at all, they will continue as they have with the interest rate and terms in very, very fine print.
nanny government
What do you expect? Half the adults in this country can barely read at a third grade level or could not write a coherent sentence if their life depended on it. The vast majority of these people do not care that they are staring into a financial abyss but only care about getting something NOW. So even though i really don't feel sorry for these people, I do feel that these documents as written are on their face meant to deceive. There is no reason why any contract should not state every material aspect in clear, concise everyday language at the beginning of the contract in bold print. But to think this will stop people from entering into stupid contractual agreements is a real knee-slapper.
Stupidity is not fraud
Here we go again.
Our nanny government is going to step in again to make sure stupid people who refuse to read contracts and refuse to bring someone who can, are protected from their own stupidity.
I have taken out these loans and any interest I paid was my own stupidity.
Banking Rules
I am glad to see some new regulations coming out protecting people from the worst excesses of agressive banks. While I don't think it is the government's job to protect people from their own stupidity, some of these contracts are so deceitful that they should be illegal.
