How often have you gone to a store just to look around and ended up buying something you didn’t need? Well, you are not alone. Many of us go to furniture stores and supermarkets to look at appliances, beautiful blue couches, and classic coffee tables. Scouting can’t hurt, right? But then you see an offer you just can’t refuse.
The salesman tells you about a payment plan called “90 days same as cash,” which sounds interesting. With this offer, you can take your favorite piece of furniture or appliance home right now without paying anything, and you have 90 days to pay for it. Isn’t it interesting?
It might be hard to say no to deals like this, but if you aren’t careful, you could end up in a lot of debt. Let’s talk about what 90 days same as cash means and how it works.
What do “90 days same as cash” refer to?
We’ve all seen online shopping sites and furniture stores that offer payment plans called “90 days same as cash.” The store makes you feel like you’re getting the goods you want while getting a free loan for 90 days. This cash offer doesn’t charge interest, and you don’t have to pay anything back until later. The deal might be good for you, but it’s not as easy as it seems.
How does it work?
With 90 days same as cash, the store promises you won’t have to pay any interest for 90 days. This would also be true if you paid cash for something in full. But if you can’t pay it back in 90 days, you might have to pay a lot in interest. It has a financing plan with deferred interest that only works in your favor if you can pay it off in 90 days. If you don’t pay on time, interest will be added to the whole amount.
Same as cash risks
Before you sign up for 90 days same as cash, it’s important to know what could go wrong. It’s a financing offer with deferred interest, which means that the interest will start to be charged from the date of purchase if you don’t pay on time.
If you buy something for $3,000 but can only pay $1,000 in 90 days, you will pay interest on the full $3,000 at the end of the 90-day period, not just on the remaining $2,000. In this case, the interest will be added to the balance from the date of purchase backward.
In a perfect world, you would be able to finance the purchase and pay it off without having to pay any interest. However, this is not always the case. You might think you can pay off the balance, but something could happen to throw your finances off. This is something the store knows, which is why they want to offer this deal. The interest rate can sometimes be as high as 24 or 36 percent.
Almost 80% of people who choose these deals don’t pay off the full balance by the end of the 90-day period. Even if you are very responsible, life may throw you little emergencies that force you to go in a different direction. You could also be one of the 20% of people who paid off the balance and paid in full, but if you had saved up for the purchase, you wouldn’t have had to worry about interest in the first place.
If you are late on a payment, the deal can also go bad. Some programs will cancel the special right away, even if you are late by just one day, and you may have to pay finance charges.
90 days same as cash is not the only option.
If you don’t think you can pay for something in full, you might also have trouble getting a loan to pay for it. When money is tight, it’s best to save up for big purchases so you don’t get into trouble. Use the 90 days to save up for the purchase, and then go to the store. It will teach you to save money and you may find that you don’t want the things as much as you thought you did.
You could also use a debit or credit card to pay for the item. It will work a lot better than the deal for financing. If you qualify for a credit card with a 0% introductory rate on purchases, you will have enough time to pay off the balance, and even if you can’t, you won’t have to pay interest until the end of the promotional period. Still, the interest is not calculated backwards, as it is with 90-day cash financing.
If you want to stay in charge of your money and you don’t have any appliances or furniture, this is an option. In the meantime, buy a used appliance that can do the job. Decide if you can live without the item for now. If you can’t, go to a second-hand store and look for used versions of the item. You might find a good deal here.
When you want to buy something big, you might want to apply for a personal loan with low interest. But your credit score will be very important in this case.
Who should choose 90-day same-as-cash?
If you already have money set aside for your purchase and know for sure that you can pay off the amount in 90 days, you might want to think about the deal. Still, you might be able to make the payment on time if you have 70% of the amount and a steady flow of cash. If that’s the case, it might be a good option for you.
Who shouldn’t go to 90 days same as cash?
If you don’t have good money management skills and often buy things on the spur of the moment, 90 days same as cash is not for you. It could get you into a lot of trouble and cost you a lot of money. Look at your finances and then decide if you can pay back the money in 90 days. It might not be the best thing to do.
- Own things without having to pay a big lump sum. Same as cash can work in your favor if you have a good handle on your money. It will let you buy things like appliances or furniture without having to pay for them all at once.
- Helps decide what to buy. With the same as cash financing offer, you can plan your purchases ahead of time and keep track of your money.
- A lot of interest. The same as cash has high interest rates, and if you don’t pay on time, it could go as high as 36 percent! This could cost you a lot of money.
- It can be a bother. It’s important to pay the amount by the deadline because if you can’t, it will turn into a debt burden. The interest will keep adding up, and in no time the amount will be very large.
- Messes up finances. If you don’t keep track of the money, you could lose your way. When you buy something, you don’t know if an emergency will come up and throw your budget off. If something goes wrong and you can’t make the payment on time, it will mess up your budget.
Several companies offer this deal to get you to buy something you might not have otherwise. They know that not everyone will be able to pay off the debt and will have to pay interest, which can be used as extra money. So, if you want to buy something but don’t have the money, start putting money aside. With deals like “90 days same as cash,” you could quickly end up paying a lot of interest.