Special Credit Offers – Read the Small Print

I recently entered a big box consumer store and while waiting to take care of my business, noticed a marketing ad on the wall of the store, touting a special the retailer was offering of special terms for credit.

I always look at these special offers and have gotten good at picking them apart quickly to get at the meat of the offer and what my responsibility is and what the lender or retailer is going to do.

I have used these on occasion for big purchases. Sometimes the offer of opening a new line of credit on purchases over a certain dollar amount will benefit you with 10-20% off your purchase for the day. If you’re spending a few thousand, that discount with a new credit line could end up being several hundred dollars. Not bad when you consider the whole picture you find yourself in. soft pull credit offers

The most recent offer I took advantage of was several years ago when I bought a pretty expensive piece of jewelry for a lady. The offer I was presented with gave me no interest and no payments for 3 months. I had come to purchase my bling with cash and was prepared to do so.

Many retailers and small operators will give discounts for cash because it costs them less to do business. They don’t have to pay card transaction fees to Visa, MasterCard, Discover or AmEx which can range from 1-3% of the amount charged and sometimes more.

But given my present circumstances at the time, I decided to take the deal and keep my cash for three additional months. I re-read the terms and was fine with them and so I signed away and left with my lady’s jewelry and my pocket still full of cash.

I did make small payments during those three months of no payments and no interest because I wanted to knock down the balance at least a little before I paid in full at day 90 of my short term loan. Keep in in mind, that’s all any credit offer, or credit card or loan is: a short-term loan that must be repaid.

Here’s what I’ve learned about these special deals for credit: there is never an instance where you don’t pay interest. Many say no interest for a certain period of time, but what they don’t advertise is that you are accruing interest during the “free time” and it’s being added to your balance. If you don’t have your debt paid in full at the end of the free period, you pay interest on the whole period, whether it was 3 months, like mine, or a year or whatever else. Beware of this and plan accordingly.

I’ve also learned that some deals require you to pay a percentage of your balance every month, usually 1.5-5.0% of your balance to maintain the terms. If you skip a payment, you default and your interest rate goes up, increasing your payment and making you eligible for a headache for the foreseeable future.

It’s always best to pay for what you buy and be done with it. You can’t argue with no debt and no payments and having the satisfaction of having bought your item and owning it free and clear. That being said, options are nice. Cash talks, but sometimes good terms make sense to defer payment for a short amount of time.

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