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Intro to "Paying Less With Credit Promotions"

Pay less for products by taking full advantage of credit promotions offering delay payments, and credit cards at zero percent interest rate


Try the calculator Paying Less With Credit Promotions >


We are regularly exposed to credit promotions. Some promotions offer credit cards with zero percent interest, while others are linked with the purchase of goods, and propose no payment for several months, or in the case of financing offer no payment and no interest for several months.

When promotions are applied on products, they are normally applied on consumer goods such as appliances, furniture, vehicles, renovation materials and many other products which can be relatively expensive for the household.

If you really need to buy a product, and this type of promotion is in effect, it is actually possible to take full advantage of the zero percent interest and the payment delay to pay for the product at a lower price.

To do so, the technique is simple but very effective. The moment you decide to buy the product with this kind of promotion, invest the amount of money needed for the purchase instead of spending it, and let it gain interest during the time of the 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 the purchase, because the amount invested at the beginning of the promotion is lower then the real price paid in the end.

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 with no payment and no interest, you can put aside $5,000.00 and invest it at 5% to obtain $5,250.00 at the end of the promotion, 12 months later. That way, you saved $250.00 from the purchase of the products since you only disbursed $5,000.00 but bought at $5,250.00.

Nevertheless, there is a possibility that the interest charges are included in the price of the product, which is something to verify. If they are included, get informed on the interest rate charged and see if it is still worth it. If the charges are not included, the last example showed how you can save by taking advantage of the promotion.

In the case of credit cards with very low interest rates (between 0% and 2%) applicable for a limited period of time, the interests are not hidden because they are not linked to any products. However, the interests might be accumulated during the promotion and could be charged in total if the balance is not entirely paid at the end of the promotion.

In other cases, credit card companies could ask for a minimal payment every month in order for you to remain in the promotion. There are ways to avoid paying high interest rates and to take advantage of the delays if the full payment is made on time, or if minimal payments are done regularly. You just have to make sure you understand the full agreement and not fall into any traps.

It is also important to know that even if you have the money at the moment of the purchase, it is always to your advantage to invest that amount instead of spending it immediately. Otherwise, you will end up paying for the product at a higher price, by renouncing to the income from interests it could provide.

If you don't have the right amount to invest at the beginning of a promotion, you can always invest a 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 results show that it is worth it.

The following calculator will help you find out the amount needed as an investment at the beginning of a promotion, in order to have the full amount needed at the end of the promotion. Just indicate the price of the product, the term of the promotion (in months) and the annual interest rate applicable on your investment.


Try the calculator Paying Less With Credit Promotions >

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

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