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Intro to "Paying Less With Credit Promotions"

Paying less for your products by taking full advantage of credit promotions with delay payments and credit cards with zero percent interest rate

 

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We are regularly exposed to credit promotions. Some offer credit cards at zero percent interest and others are linked with the purchase of goods and propose no payment for several months, or in the case of financing, offers no payment and no interest for a few months. When promotions are applied on products, they are normally applied on consumer goods such as appliances, furniture, vehicles, renovation material and many other products with a relatively high price for household. If you really need the products and this type of promotion is in effect, it is possible to take full advantage of the zero percent interest and the payment delay to actually pay the product at lower price.

To do so, the technique is simple but very efficient. The moment you decide to buy the product, invest the amount of money instead of spending it for the purchase, and you let it gain interest during the whole promotion. The idea is to take advantage of the time given by the promotion to put aside a lower amount and create interest revenue until the amount of money reaches the specific price for the disbursement at the end of the promotion. Therefore, you lower the real price of purchase, because the amount invested at the beginning of the promotion is the amount disbursed for the purchase, which ends up being lower then the real price.

For example, if you decide to buy appliances at a cost of $5,250.00, and a promotion from the purchase gives you 12 months no payment and no interests, you can put aside $5,000.00 and invest it at 5% to obtain $5,250.00 at the end of the promotion, which is 12 months later. That way, you save $250.00 from the purchase of the products, since you only disbursed $5,000.00 to buy products at $5,250.00.

There is a possibility that the interest charges are included in the price of the product and it is something to verify. If it is included, get informed on the interest rate charged and see if it is worth it. If it is not included, the last example showed how we can save with the promotion. In the case of credit cards at a very low interest rate (between 0% and 2%) applicable for a limited period of time, the interests are not hidden because it is not linked to any products. However, they can cumulate during the promotion and may be charged in total if the balance is not entirely paid at the end of the promotion. In other cases, credit card companies ask for a minimal payment every month to stay in the promotion. There are ways to avoid paying high interests and take advantage of the delay if the full payment is made on time or if minimal payments are done regularly, you just have to make sure to understand the full agreement and not fall into their traps.

It is important to know that even if you have the money at the moment of the purchase, it is always to your advantage to not spend it immediately and invest the amount instead, if not, you will indirectly pay the product at a higher price by renouncing to interest income. In a case where you don't have the right amount to invest at the beginning, you can always invest smaller amount each month and cumulate interest on it until you obtain the right amount to disburse at the end of the promotion. Any cumulated interest will help you lower your cost. It is obvious that this technique requires a certain amount of discipline, but the result shows that it is worth it. Our following calculator will help you find out the amount needed as an investment at the beginning of the promotion in order to have the full amount at the end of the promotion. You just have to indicate the price of the product, the term of the promotion (in months) and the annual interest rate applicable on your investment.

 

Try the Paying Less With Credit Promotions Calculator >

 
 
 
 
Numbers in our calculators are rounded to two decimals.
The same calculations made in an Excel spreadsheet may differ slightly.

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