A lot of people on this site suggest buying things only if you can pay for them using cash. Basically I agree with that; but sometimes that's just not possible. Most stores now have "12 month no interest" plans. Even if you have the money you can use that method.
As an example, it's easier to come up with $100.00 a month as opposed to $1,200.00 all at once. You do need to pay it off within the 12 months, because if you don't the interest will most likely be retroactive.
In the past 10 years or so, using this method, my husband and I have bought: living room furniture, refrigerator, freezer, stove, dishwasher, washer, dryer, ceramic tile and wood flooring, 55 inch television, eyeglasses, and probably something that I've forgotten. LOL!
We've ALWAYS paid it off early, usually in half the time. But it's nice to know that we have extra money every month in case of an emergency.
By Margaret from Denton, TX
I've done this also for major appliances and furniture even when I have the money to pay for the items. No brainer -- it's free financing. Another tip to keep track of the payments is to set up an automated bill payment with the bank to stretch out the payments for the year I've been given to pay, and ensure the bill is paid off on time.
I have also done this for quite a long time. It sure made my life alot nicer, but as you were saying "make sure you can pay it off in the specified time or earlier. I have it deposited right into my bank acct.
We have just started doing this. What a great way to buy good quality furniture or appliances, with no interest! We paid off our balance three months early, made everyone happy.
I've done this also. Why take the money out of the bank when you can get the float for free!
And, Sears is offering no interest for 24 months on a lot of their applicances and TV's if anyone is debating on a purchase as of today (Nov. 17, 2010)! They're the only store I know of that is doing 24 months rather than 12 months.
Great tip, makes me wish even more that hubby was as bargain-conscious! Last time he found the 0% for a year deal, he refused to make a single payment until the year expired. Worse yet, the last big-ticket item he bought at Sears, his 55-inch, flat-screen TV, is no bargain at 25.24%! :P!
Just food for thought: I too did this for years. It was great and we got lots of great stuff. After 14 years I suddenly lost my job and was stuck with a rather large bill. In order to not have the high interest at the end we rolled the purchase onto a low interest credit card. Three years later we are still struggling to make the minimum payment and it has seriously affected our credit score. We had savings in the bank to pay it off but the furnace and hot water tank went out and had to use the money for that. Unless you have a serious amount of money in savings so that you could pay for multiple emergencies and the 12 month loan I would not advise this method. You never know what is around the next corner.
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