While this isn't a question per se, you should be asking questions when a merchant tells you it is the same as cash. I thought I'd list a few points about this type of sales gimmick. On the surface it looks real good but you have to look below the surface to see the whole deal. Maybe these points will help you look at it with a honed eye.
First, you will pay no interest for a certain period of time. You already knew that but what you may not know is the merchant is calculating that interest from the moment the deal is finalized. In other words, from day one.
Second, if you pay off the debt so much as one day late you will pay every penny of interest that was accrued during the grace period. If you had a 90 day same as cash grace period, you will pay 90 days of interest. If you had 180 days of grace period, you will pay 180 days of interest. Etc, etc, etc.
Third, the rate you will be charged is likely to be over 20%. The carrying costs for this type of financing are extremely high. Be sure to read the details in the paperwork the merchant hands you.
Fourth, if you can’t afford to buy it now, don’t buy it at all. The grace period is nice but not worth having your credit wrecked or damaged.
Fifth, many times these same as cash deals are routed through finance companies. You should be aware that when it comes to credit scoring, references from finance companies are considered more risky than those from bank credit cards or retail store charge cards.
Sixth, because these are generally low limit credit amounts, you will max out your credit limit to expenditure ratio for this particular trade line. This will temporarily lower your score. If you do pay on time, your score should rise.
I hope this info helps.
When I had my Lasik surgery, I went with one of these zero percent financing offers. Thank goodness I paid attention to what I was signing, because if I had not paid off the balance in full before the end of the term, I would have ended up paying over $1,000 in interest charges. In my case, it worked out well, but I would still say, "Buyer Beware!"
JeanLorie,
Buyer beware is always fantastic advice. Those hidden clauses and terms can cost a person dearly. These same as cash offers are especially tricky and people really need to read every paragraph. I am happy to hear you paid attention. A lot of people don't then wonder how they got blind sided.
