0% APR In-Store Promotions
“Would you like to sign up for our store card today? You get 10% off your purchase and 0% APR for six months!â€
Sound like a store associate you’ve bumped into before? More and more stores are creating their own credit cards, using employees to push them. The employees get incentives such as prizes or a little extra bonus on their next paycheck for ever application that gets filled out. To make things easier, oftentimes you can obtain and use your new store card right then and there at the checkout. Stores that sell major appliances will occasionally offer up the “No interest until 2009!†or some other multiple year offer. It sounds good, and can be very good, as long as you understand how they work and what they can truly offer you.
Now that you’ve gotten your 10% off on your purchase, you have a card that boasts no interest for quite some time. What can you do with this lack of interest? In similar fashion to 0% balance transfer cards, you need to stay on top of the balance and remember exactly when the 0% offer is up. You also should have checked out the fine print to see if this was a card you could truly use or if the regular APR was so through the roof, the card would turn to dust in your wallet from disuse. Opening too many credit cards can hurt your credit score, so choosing in a judicious manner is always the best course of action for any new card offer.
As long as you pay off your balance before the promotion is up, you will have no worries. When it comes to small purchases, such as a clothing splurge or a set of power tools, paying off the balance should be easy. However, if you use the promotion for a major purchase such as a refrigerator or furniture set, be ready to organize your money so you can pay off the purchase in full before the offer is extinct. Again, the fine print is your friend – many people forget all about it and then find themselves shocked when they realize they have to pay $1,800 instead of $1,500 like they thought. Some stores will charge you back interest. This back interest uses the current APR and starts the interest charge from the date you made the purchase. Essentially, if the APR is 23%, you will have all that interest tacked onto your balance from the very day you bought the refrigerator or furniture set, effectively erasing all that time spent at 0%. It renders the offer useless and you are paying the same amount as if there had been no promotion at all.
Paying close attention to your finances, understanding what you can and cannot afford over time can help a great deal when you decide to finally make a major purchase. Many people have learned to use these offers in the most effective ways. By paying off the entire balance before the time limit is up, you can save yourself a huge chunk of money that can be used elsewhere in life. Remember not to be too hasty in getting a new card; you can always take your time to read all the details and be fully clear on what you could be getting yourself into. Saving yourself 10% at the time will do you absolutely no good if you find you are paying a lot more in interest later on.