Are Holiday Credit Card Promotions Right for You?

Budgets and holidays don't always go hand in hand. Putting gifts on a credit card can be tempting, but interest charges might sour your spirit and you might be drawn to credit card promotions with enticing offers such as "no interest if paid in full in 12 months" or "0 percent intro APR for 12 months."

They sound similar, and either can help you avoid interest for a while. But one merely defers interest, which can be more costly if you don't understand the terms. Find out what you're signing up for and whether it's the right fit. KNOW THE DIFFERENCE Here's how these two credit card promotions differ:

— Deferred interest: You won't pay interest on your qualifying purchase if you pay it off in full during the promotional period. But if any balance is left over at the end of the promotion, you get charged interest for the entire amount of the transaction from the purchase date.

— Introductory 0 percent annual percentage rate: No interest accrues on purchases you make during the promotional period. If you have a balance when the promotion ends, you'll pay interest on that amount only from that date forward.

The National Consumer Law Center calls deferred interest offers a "deceptive bargain " and advises people to avoid them. The Consumer Financial Protection Bureau has warned credit card companies against deceptive marketing of interest rate promotions.

"A true 0 percent APR offer is much better for consumers," says Chi Chi Wu, a staff attorney at the law center. PITFALLS OF DEFERRING INTEREST Deferred interest offers carry risks and can get complicated. Drawbacks may include:

— Higher APRs. The average APR charged in 2016 on credit card accounts that incurred interest was 13.56 percent, according to the Federal Reserve. But the average APR on deferred interest credit cards is 24 percent and can reach 29.99 percent, according to an NCLC report. When your promotional period ends and that APR kicks in, the interest payments can get expensive, particularly if you've used the card for other transactions. And if