Quote:
Originally Posted by danberger
no such thing as free credit - 0% is funded by the store so you are missing out on a discount - there was a Revenue & Customs (equivalent of IRS) case a few years ago which proved what the stores selling furniture on "interest free" were really charging for their goods. Its an illusion - if 0% is on offer then there is a discount there to be dug out !!
|
You are likely correct, but it's much more complex than you state. In regard to Rolex watches at ADs, some are simply not available at less than MSRP, but the big chains sometimes offer 12 months interest free. Now there is no question that interest free loans cost somebody the $$ but the dealer likely doesn't pay the entire cost. The nature of these interest free loans, especially for furniture, are that many people bite off a bit more than they can handle. The terms are nearly always with a very high default interest rate if you fail to make the required payment. Even worse, the the interest is accrued from day one and instantly added to the balance. I have been told many of these loans end up generating interest income for the credit card company.
If you are very careful, using these loans can save you $700-$1000 per $10K IF and ONLY IF you stay disciplined.
I couldn't get a dime off my GMT-IIC at the Big T and they were pretty hard to find anywhere at the time. I set up a pre-planned electronic payment plan after making an additional payment just to be sure I didn't get hit with a 21.9% APR from GE credit corp. Admittedly, I got sick of it after 6 months and just paid it off, but it was a better "discount" than nothing at all.
Cost of money is the cost of money; if you're smart you may be able to work it to your advantage. There are no hard and fast rules about what's "good" and "bad" in my view. That said, sometimes what we "feel" overrules the financials. Even Bill Gates should take 12 months interest free, but if you have the megabucks it's often not worth the hassle etc.