Living beneath your means, or simple(r) living
You see the deal advertised ... a hot new sofa, only $1000, 90 says "same as cash". Cool, I don't have to pay anything and I get this sofa. And ever enticing is the option of buying something on a same-as-cash deal, and holding onto the money for a few months. You can earn some interest, and pay off the credit later.
Eventually you have to pay for it .. so how can you do so without wasting away money on interest? In my treatise on personal finance, I equate your money to your personal life force. When you're paying interest on a purchase, you're frittering away your life force. It's not a new concept, as this is the major theme of Your Money or Your Life.
Generally the deals require to make minimum payments every month, and to pay off the total amount before the final date. If you don't then they'll charge you the accrued interest during that 60-or-90-day period, plus ongoing interest until you fulfill the deal. And the interest on these aren't cheap, generally 20% or above. The phrase "loan sharks" come to mind.
Here's a few points to consider:
- The accounting maintenance ... how many hours will it take you to keep track of the credit accounts and make sure they're paid every month?
- How much will you really earn ... what's 1% interest on $1000 over 3 months? Not a heck of a lot.
- Will you still have the money 90 days from now? Or will you have spent it on something else?
When do you pay off a "same as cash" deal? That's up to you. Just make sure you pay for it before the deadline, and not after.