New rule tackles no-interest offers

— -- "No interest! No payments for 18 months!" "Two years, same as cash!"

Retailers are scrambling to save the deals they love to shout about.

A new federal rule is expected to change the promotion and perhaps even the availability of the months-long special offers, which retailers often market for big-ticket items like TVs, furniture and appliances.

The rule change, made by the Federal Reserve, does not take effect until July 2010, but some retailers are already modifying terms of their deals so they expire before then, according to the National Retail Federation. At issue is the deferred interest provisions many include — typically in fine print — as part of the "no interest" or "same as cash" deals.

Confusion abounds over what the rule change exactly means, and the Federal Reserve is expected to issue a clarification in April. One likely effect: more explicit advertising of the deferred-interest rules, perhaps as prominently as the "No interest!" claims.

"Whatever (the Fed's) intent, it's unclear enough that a lot of retailers are curtailing these programs because they don't want to be caught holding the bag," says NRF spokesman Craig Shearman. "The bottom line is, consumers are being impacted."

Officials from Home Depot, which is advertising a six-month, no-interest loan, declined to comment. Sears spokesman Christian Brathwaite says it is reviewing the rule and is working to meet the Fed's concerns and "still help meet our customers' credit needs." Federal Reserve officials declined to comment.

Related Stories

4 big takeaways from Day 10 of Trump trial

• May 2, 5:50 PM

'Life-threatening' flood conditions in Houston

• May 3, 3:41 PM

Man kills wife, 3 kids in mass shooting: Police

• Apr 23, 12:35 PM

Favorite of furniture retailers

The no-interest or deferred-interest loans come in many forms and often draw varied responses from consumers and credit counselors about whether they are a great deal or a way to take advantage of already struggling consumers.

The deals can run from a few months to two years or more, and sometimes don't require regular payments. When minimum payments are required, they may not cover the whole balance by the end of the loan, leaving a lump sum payment due at the end.