Beware 0% Interest Finance Offers

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Just a word of advice for those of you tickled by the thought of owning a television or refrigerator by paying only the minimums on a 0% interest finance deal… see, the one thing that most stores don’t mention is that after the promotional period has ended, the interest that would’ve accrued during the promotional period will be packed onto the loan immediately!

My advice is to read the fine print to find out what the hidden interest rate is while the 0% promotional offer is in effect, sometimes it can be ridiculous. Second, only buy these products if you can pay off the entire thing before the promotional period ends. If you can’t, try to secure some better financing terms before the promotional period ends so you aren’t stuck paying ridiculous rates for a few months.

Finally, remember that it’s a loan so it’ll appear on your credit report and ding your credit score. If you plan on any big purchases, house or car, then you might want to hold off on the new flat screen.

{ 8 comments, please add your thoughts now! }

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8 Responses to “Beware 0% Interest Finance Offers”

  1. echy says:

    This is true for most of these offers. The exception is Sears. I have used zero percent financing for them on a couple of purchases in the past and they did not accrue the interest.

  2. Debt Hater says:

    I used one of those deals two years ago when I bought a new couch. I read the fine print and I knew what would happened, so I just calculated how much I needed to pay monthly to pay off the loan about two months before the promotional period ended. no problem. The only thing I didn’t know at the time was that the new line of credit would take down my credit score a bit.

  3. Damon says:

    Yep, we used a 0% offer to finance splurge on an item… 3 years 0% interest… I made sure our payments were made in such a manner that it was paid off in 3 years… but I, too, didn’t think about the impact of the additional credit on my credit score…

  4. Valeri says:

    Its funny that I’ve come across this forum- I just got a bill from Circuit City (a Chase credit card) for a TV I purchased a year and a half ago at 0% interest for 3 years. Great right?! WRONG. I was 5 days late on my last payment, and guess what happened- I was charged $747.14 for the waved finance charges since I bought it. I calledand spoke to a few people at Chase, and nothing. They are absolutely ruthless, so my advice is to not use credit cards, or dont be late,

  5. Wizard Prang says:

    The last time I purchased anything with 0% credit over six months, I paid it off in three. That was two years ago, and I am not doing that again.

    There is too much risk – and remember, they _want_ you to be late paying. That’s how they make their money.

  6. c. iva britton says:

    I am brand new to this site, so hello. I used 0% interest one other time to buy this laptop. It worked out well. I recently financed some unavoidable veterinary expenses at 0% for six months that I can afford to pay off completely using my federal tax return. Question, pay it off 4 months early using tax money or continue to pay monthly to be paid off prior to 6 months? (I have no other debt besides mortgage, which is current). I Hope it’s appropriate to ask for this kind of advise here? Thank you.

    • Jim says:

      Given the low interest rates for savings accounts, if it were me, I would just pay off the 0% debt with my return and know for sure that it won’t ever become a problem. You give up a little bit of interest but it’s not enough for me to hassle over remembering to pay each month, etc.

  7. ike says:

    Hello guys thanks for this useful site. I am new to this ‘credit card infested system’. I do not have a credit card yet and i have no credit history. What is the best way to start building a history for myself. Thanks guys

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