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The Mind-Blowing Secrets Retailers Don’t Want You to Know

The signs are everywhere … “Same As Cash!”, “No Down, No Interest, No Payments Until Next Summer!” or a very popular one these days, “0% Interest on Balance Transfers until 2021!”

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Maybe you’ve fallen for these promises in the past or are tempted to do that now. With retailers and banks so anxious to improve their bottom lines, deals like that are showing up everywhere, it seems. How do they do that? Or more importantly, why?!

News Flash!

Retailers and lenders aren’t in business to make your life cost less. They don’t even care about you. Their only goal is to make money—not a bad thing, but something you need to keep in mind.

100% certain?

The only way it might be smart to take advantage of no-interest financing and/or a no-payment period is if you are 100 percent sure you will pay the purchase or credit-card balance in full before the end of the promotional period. Otherwise, you might as well stuff pennies in your nostrils now because you’ll end up paying through the nose.

Tell me something: What in life is 100% certain? Come on … dig deep. You know the answer: Not much!

You have no idea what will happen between now when you fall for the unbelievable deal and six months or a year from now when that gigantic balance is due and payable. If you are unable to come up with the cash before the deadline, the company will be more than happy to convert the balance into payments—under the terms buried in the paperwork you will have to sign to close the deal.

Financing specifics offered through retail stores vary from one company to another; laws that regulate these kinds of consumer issues can vary greatly from state to state. 

Beware that interest rates on store credit cards tend to be a lot higher than national cards. An entertainment center may not seem so entertaining with 29.99 percent interest tacked on. And if that’s not enough, signing up for financing like this could hurt your credit rating, which is affected by adding new accounts that start out with a big balance equal to the entire credit limit.

Always remember that these no-interest deals mean the interest and payments are being deferred for a period of time, not waived. If you do not keep to the exact terms of the deal, you’ll lose your deferment and the deal will immediately convert to terms that are not in your favor—retroactively to the day you walked out with that fancy new [fill in the blank].

So how can stores afford to make these outrageous deals that appear to be so favorable to the consumer? First, only those with excellent credit scores can quality for the deal as advertised. And even then, statistics show that more than 75 percent of the time, the consumer is unable to come up with the full balance in time to pay it off before it converts into very big monthly payments because stuff happens.

News Flash: Retailers and lenders aren’t in business to make your life cost less. They don’t even care about you. Their only goal is to make money—not a bad thing, but something you need to keep in mind.

So ask yourself this question when you’re tempted to fall for free financing: “If I can’t pay for it now, what makes me believe I’ll have the cash to pay for it in six months or even a year?”

If you’re just sure you’ll be able to save every month to accumulate the cash, do yourself a favor and start saving now. Then walk into the store with cash and you won’t have to fiddle with annoying credit applications and complicated paperwork.

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6 replies
  1. tboofy says:

    Just like rebates count on people’s good intentions going astray, these offers rely on you forgetting exactly when you were supposed to have everything paid off so they can get retroactive interest. I’m always very diligent with these kinds of offers (or don’t take them), but I have a friend who has been taken in this way more than once. She even had the money to pay, just forgot when it needed to be paid off.

  2. Bonnie Saal-Feldbush says:

    Right before Thanksgiving, the motor went on our washer. We WERE going to begin saving the first of the year, knowing we would have to purchase a new one. We did open an account at Lowe’s, zero percent financing for 12 months on purchases over $300.00. The washer I was interested in was on sale for the holidays, we have zero percent financing for 12 months, and we’re making automatic weekly payments of $10.00 each; the washer will be paid off well in advance of the 12 months, even with allowing for a few weeks of not being able to cover the $10.00 weekly payment.

  3. Cheryl says:

    These offers can be GREAT..IF..you work them correctly 🙂 My LOWE’S had a GREAT deal on Pergo laminate flooring in 2007. I signed up for their charge card and got another 10% OFF AND one year no payments, no financing. The salesman was a bit concerned because my total was $3,000 and he said they don’t usually open new accounts with a credit limit that high. My credit has ALWAYS been SOLID GOLD so I KNEW it wasn’t an issue 🙂 He CHOKED when he saw the LARGE limit they set up for my account 😉 I paid $400 a MONTH on that bill…even though I didn’t HAVE TO DO IT.. THUS, WELL BEFORE the balance was due in full-it was PAID IN FULL. THAT is the ONLY way to handle that type of financing. My sister and her husband bought furniture on the same type of financing. I TOLD HER to NOT DO IT but ……why LISTEN to your big sister with a SOLID GOLD credit rating ? 🙁 They did NOT make payments and when their PAYMENT came due, they were one week LATE paying it in full… Guess what??? FINANCE CHARGES BABY 🙁 Back to day ONE… She called me asking for advice. I told her to ‘suck it up’ and PAY IT because you SIGNED for it. Lesson to be LEARNED 🙁

  4. Kathy Glaser says:

    I took advantage of two of these offers, for my washer & dryer at hhgregg and refrigerator at Sears. I have a payment plan and have already arranged final payments for both. Money saved!

  5. Dianne De Mink says:

    Questions on 0%/21 month. Why would there be a balloon payment at the end of the 21 months? Would a probably higher interest rate (than I’m paying now) be the reason ? What about transferring a partial balance on my current CC (that I could pay off in 21 months? Would a bank do that? Debt is something I’m good at, getting out of it, not so much.

  6. Birgit Nicolaisen says:

    I have taken advantage of these deals before….if you create a monthly payment schedule then it’s all paid off on time. I usually create the schedule for a least a month before it’s actually due so I know it’ll be done ahead of time. It does mean that you have to stick with your schedule, but it helps build your credit score at the same time.


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