Have you ever wondered how retailers can possibly afford to offer the no-interest, no-payments and no-downpayment kind of deals you see advertised? That was the subject of a letter I received recently.

Dear Mary: There are several appliance, electronic and furniture stores in our area that run television commercials offering no money down, no payments and no interest until 2016. It sounds like I can just walk in and take what I want and not pay for a year! How do these companies really make money? Kate


Dear Kate: First, these offers are on approved credit and come with a lot of other fine print. It takes pristine credit to qualify for those attractive terms. One retailer told me only about 25 percent of the people who apply for the amazing offers that get people through the door, can actually qualify. The other 75 percent are offered some other deal with horrible terms, which they usually accept because by the time it gets to filling out the paperwork, they’re so emotionally involved and have their hearts set on that “free” big screen TV, they’re anxious to sign anything.

Let’s say you’re one of the 25 percent. You have $3,000 sitting in the bank, you could pay cash for that TV but you decide to go for the nothing-down deal so you can earn interest on your money until 2016. You still have to fill out and sign a credit application and that requires a credit check. You still have to agree to very steep interest (like 24.99 percent or more), which is deferred (not waived) until 2016.

The contract will read that if you are late paying that balance in full at the specifically appointed time on a certain day, you lose your deferment and you owe interest back to the day you signed the contract. From that moment on you must begin making enormous payments.

Here’s the ugly truth: About 78 percent of the people who qualify for these deals do not pay the account in full at the appointed time for whatever reason. Life happens. The money in the bank gets used for some other more urgent situation. That means you’re now stuck with enormous payments plus all the deferred interest on a TV (or other item) that is by then no longer new with a market value of much less than it was the day you thought you got such a steal.

My advice? Don’t even think about these kinds of come-ons. If you can afford it, pay for it. In full. Now you own it. And if you can’t afford to do that? Then make payments to yourself until you save the full amount.

Discipline and delayed gratification are still excellent character builders.

Hope that helps!