Experts advise against relying on store credit cards as a primary payment method.

Be cautious when signing up for a store credit card, as it may seem enticing with discounts and offers, but it's important to consider the potential consequences.

Many retailers provide credit cards or special financing options that include "deferred interest."

If you make regular payments during the deferred interest period, which ranges from six months to two years, you won't be charged interest. However, if you miss a payment or don't pay off your balance on time, you will be charged for all the interest that has accumulated since the purchase.

Using a store credit card with deferred interest can result in paying nearly 28 times more in interest charges compared to using a regular credit card with a 0% annual percentage rate, according to WalletHub's data.

Odysseas Papadimitriou, CEO and founder of WalletHub, advises against using deferred interest as a final option, according to a CNBC Make It report.

If you can stick to the payment schedule, signing up for a store credit card with deferred interest isn't a terrible idea. However, it's not the best first financing option to consider, advises him.

Deferred interest financing can come with costly penalties

Deferred interest can result in costly surprises for around 60% of people who don't understand how it works, according to WalletHub.

If you don't pay off your balance on a regular credit card with a 0% APR period, you will only owe interest on the remaining balance. On the other hand, if you don't clear your balance on a deferred interest credit card, you will have to cover all the interest charges that accumulated during the promotional period.

The interest charges on store credit cards can be high, with many regular rates exceeding 30%.

You purchase a new kitchen appliance for $5,000 with the store's 12-month, 0% deferred interest financing plan. However, interest will still accumulate during the promotional period.

If you miss your last payment and the card's regular interest rate is 29%, you could be liable for approximately $800 in retroactive interest, even though you were close to settling your entire purchase, according to Ted Rossman, Bankrate's senior industry analyst.

If individuals do not pay the entire amount before the deferred interest offer expires, they may be charged retroactively for all the interest that would have accumulated back to the start of the promotion, even if they only have $1 left, according to him.

Deferred interest v. balance transfer credit cards

Retail credit cards with deferred interest are not the same as 0% APR balance transfer credit cards.

While both a balance transfer credit card and a retail credit card with deferred interest do not charge interest during the introductory period, their differences lie beyond this initial period.

If you don't pay off your balance on a balance transfer card before the introductory period, you'll only be charged interest on the remaining balance. Missing a payment may result in a late fee or other penalties.

If you miss a payment on a retail card with a balance, you will be charged with all the accumulated interest.

Instead of increasing debt, balance transfer cards can assist in paying it off.

If you have a high balance on a credit card with a 21.19% interest rate, which is the average rate for existing accounts, according to WalletHub, you can transfer that debt to a balance transfer card and take advantage of the 0% APR introductory period, which stops interest charges, allowing you to focus on paying off your principal balance.

When it comes to deferred interest, proceed with caution

Not all store credit cards and special financing plans employ deferred interest. To determine if you're enrolling in such a plan, look for the key word "if."

According to the Consumer Financial Protection Bureau, financing plans that offer "No interest if paid in full within 12 months" use deferred interest, while credit cards without deferred interest state "0% intro APR on purchases for 12 months."

If you use a deferred interest financing plan, you could save money, but you must be sure you can pay off the full balance during the introductory period, according to Matt Schulz, LendingTree's chief credit analyst.

If you're not confident that you can repay the purchase within the introductory period, consider other options. While these deals can certainly help you save money, a small error could lead to a significant retroactive interest charge.

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