You’ve heard the promos. Buy now, pay nothing until January 2008. No payments. No interest. Great deal, right? Let’s find out.

I know I can pay for my item before the interest hits, so this is a good deal. If you can pay before the interest hits, why don’t you just save the money and buy it in 90 days? What happens if you unexpectedly lose your job or have a major health crisis in that 90 day time frame? Life is unpredictable. Never assume that you will be able to pay something off in 90 days if you can’t pay for it today.

I think I can pay this off in 90 days, but if I can’t, I’ll just pay interest for a couple of months. It will be OK. You don’t “just pay interest” for a couple of months. When you buy something on a 90 days same as cash plan, if you don’t pay it off completely in 90 days, all of the interest that accumulates in that 90 days time frame is added to your balance. Interest starts accruing the day you take the item home. There is no grace period. If you don’t pay, be prepared for a large interest charge.

How much could the interest possibly be? Isn’t the going rate around 12% these days? On the contrary. For a 90 days same as cash promotion, it isn’t unusual to see an interest rate upwards of 22%. That’s an awful lot of interest!

Isn’t it great the the store wants to make it easy for me to afford nice things? A better question to ask would be “What does the store get out of this deal?” The store managers know that most people will not pay their bills in full within the 90 day promotional period. So this deal is actually very lucrative for the business. Always remember, if the business isn’t making money on the deal, they wouldn’t be offering the promotion.

What can you learn from all this? If a deal seems too good to be true, it probably is. It’s always better to save your money and pay cash upfront than to take a 90 days same as cash loan. Why take the risk?