Is It the Same as Cash If I Pay in 90 Days? It Isn't Always a Very Good Deal

Is It the Same as Cash If I Pay in 90 Days? It Isn't Always a Very Good Deal

Many stores are well-known for advertising their in-store financing options, which allow you to buy items for “90 days same as cash,” or with interest-free or no payments until a later date.

Some of the stores that are recognized for doing this are furniture and technology retailers. Many of these bargains appear to be beneficial at first glance; however, they are frequently not as beneficial as they are represented to be, and they place consumers who are already financially vulnerable in precarious positions.

The Workings of It

When a retailer tells you that they will provide you with credit for an item for 90 days at the same terms as cash, they are promising that you will not have to make any interest payments during that time period, just as you would get if you paid for the item in full with cash. 

It may appear as though there is no reason not to accept the offer; you get to walk away with your products and a commitment to pay back the money over the next few months – a situation that appears to be a win-win for both parties involved.

If all went according to plan, you would be able to get financing for the purchase, clear the debt in three months, and not have to pay any interest at all. However, it is not the case for a significant number of people. You may make the assumption that you can afford to pay off the balance in less than a month’s time without first conducting an in-depth analysis of your financial situation. 

Unfortunately, things aren’t always resolved in such a positive manner. In most cases, you will be unable to pay the balance in full within the first three months, in which case you will be responsible for paying interest on the purchase. The fact that businesses are aware of this is one of the primary reasons they are so adamant about making the deal available to customers.

If you were able to pay off the purchase in ninety days, you would be able to save up and make the purchase in three months, which would allow you to completely escape the gimmick.

The End of Your Days Spent Without Interest

It’s possible that you’ll be tempted to justify that it’s acceptable if you don’t pay off the balance in the first 90 days; instead, you’ll just pay as much as you can, and then you’ll have to deal with the interest. However, this line of thinking is not in your best interest. 

The catch is as follows, however: You will only be able to reap the benefits of the deferred-interest financing arrangement known as the 90-day same as cash financing if you pay off the balance in 90 days.

If your balance is not paid in full within the first ninety days, the interest will be charged to your balance and backdated to the day that the transaction was made. You will only be exempt from paying interest for those 90 days if you pay off the entire sum during that time period. In that case, the benefit of paying no interest will not have been extended to you at all.

Take, for instance, the case where you finance a purchase of $5,000 over the course of 90 days. You won’t have to pay any interest on the $5,000 loan if you pay it off in full during the first three months. However, if you only pay $4,500 over those 90 days, interest will be applied on the full $5,000, not just the remaining $500 as it would be if you had paid the full $5,000.

The cost of saving is lower than the cost of financing

You will not be able to afford to finance the purchase if you do not have the financial means to pay for it in full by the due date. If you want to avoid having to worry about making payments on significant purchases in the future, the best thing to do is put money aside now.

 Instead of making a purchase with the intention of paying it off within the next 90 days, you should put that money you would have spent toward saving instead. Not only can this help you create healthy savings habits, but it might also lead you to the realization that you don’t want the thing (or items) as badly as you first thought you did.

Even paying for the item with a credit card is a better option than the financing package that gives you 90 days to pay it off, especially if you are eligible for a credit card that has an introductory rate of 0% on purchases. 

You will have a lot longer to pay off your balance, but if you don’t pay it off once the promotional period is through, interest will begin to accrue on the remaining balance. It is not retroactive to the date of the purchase, as is the case with financing for 90 days at the same rate as cash.

The Crux of the Matter

These types of bargains are offered by businesses in an effort to persuade customers to make purchases that they might not have otherwise made owing to limited financial resources. 

Despite this, they are well aware that the majority of customers will not pay off their accounts and will instead accrue interest. Many companies are able to generate additional cash through the use of this method.

If you are concerned about sliding down the rabbit hole of interest and debt, a simple rule to follow is as follows: If you can’t afford it in cash, then you can’t afford it.

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