Final answer:
A deferred interest card can be advantageous for someone who is able to pay off the balance before the end of the deferred interest period, avoiding high interest costs. It's necessary for borrowers to know the terms and strategically manage their debt to benefit from such cards.
Step-by-step explanation:
When considering whether to use a deferred interest card, it's important to understand the context of credit card interest rates. For those just starting out with credit, options like department store or gas station credit cards might be more attainable despite their potential higher interest costs. A deferred interest card may be useful in situations where the borrower expects to have the means to pay off the balance before the deferred interest period ends, preventing high interest charges on an outstanding balance.
However, these cards often come with the caveat that if the balance isn't fully paid off by the end of the promotional period, interest may be retroactively applied to the entire original balance. It's crucial for borrowers to be aware of the terms and have a concrete plan to pay off debt quickly. Remember, the goal is to avoid the compounded costs of interest, as seen in the doubling effect it can have on long-term loans such as mortgages.
One might want to use a deferred interest card when they have a large purchase to make and are confident that they can pay off the balance within the promotional period. This allows them to avoid paying interest on the purchase.
For example, if you need to buy a new computer for college, you might use a deferred interest card to finance the purchase. As long as you pay off the balance before the promotional period ends, you won't have to pay any interest on the computer.