Same as Cash Promos--Nothing like Cash

What's the deal with those ads that read "90 Days Sames as Cash" "Paying nothing until 2009" "No Interest Financing"? It sounds great. I often see these headlines in furniture promotions. Maybe it's something you really want, right now. Should you take this offer? Well, don't just jump. Ask some questions first.

Is it really the same as cash?

No, not really. Only cash is the same as cash. As soon as you agree to purchase under any of these conditions you'll be asked to fill out a credit application, because essentially this is a loan. You'll probably be instantly approved without a credit check which means the store is making loans to anybody (hmm, not such a good idea).

But I know I'll have the money in 90 days, I just don't have it now. So should I take the offer?

Let's see. Is this purchase a need, something you absolutely can't wait 90 days for? If it's a major appliance, such as a refrigerator do you really need this model or would a cheaper one do?If it's furniture can you tough it out on your old bed, an airbed, sleeping bag or live with an empty livingroom for 90 days? You see what I'm saying? Unless it is an absolute necessity to have it now try waiting till you have the money. Live in the present and don't gamble with the future.

Even if I don't have it all in 90 days, I know I'll be able to pay in a few months. What's a little interest?

Once the 90 days comes you must either pay-in-full or make payments with interest. And actually it's more than a little interest. Interest usually begins accruing from the date of purchase--not the 90 day point. And rates are typically high as in 22% or more.

What about those other ads like "No Interest until 2009"?

Really it's all the same. Yes, you'll pay no interest during the time before the loan becomes due, but once the date comes you must either pay it off or pay more. Spreading the payments out will cost you even more.

This is why it's wise to save for what you want. It's the old fashion way of purchasing that we must return to. It's also why you must have an emergency fund. If you're hot water heater dies in the during the freezing month of February you don't want to get caught in an interest-free loan. Remember there's nothing like cash.