What are your thoughts on 6/12/24/months NO interest? (account, dollars, savings)

[user_id]

Why bother with the hassle for a petty sum of money? Either you don't have the cash and therefore shouldn't do it, or you do have the cash and you should use it. Taking out credit when you have the cash is just creating an artificial sense of wealth.

[CaptainNJ]

i think im going to get a new credit card with a nice no interest timeframe and pay the minimum, then the balance at the end. will be fun to see the extra money in my account. wont cost me anything.

[MadManofBethesda]

Originally Posted by RebekahOwen

Who needs $5K worth of furniture? What's the furniture worth once you buy it? You can buy a pretty decent car for $5K and it'll still be worth something in 5 years.

So will well-made furniture. In fact, I'd bet that the furniture would sell for more than the car. I recently moved across the country and sold some 10 and 20-year-old furniture for more than I originally paid for it. Some other pieces sold for 50%+ of the original purchase price.

[hnsq]

Originally Posted by user_id

Why bother with the hassle for a petty sum of money? Either you don't have the cash and therefore shouldn't do it, or you do have the cash and you should use it. Taking out credit when you have the cash is just creating an artificial sense of wealth.

Let's do some math on the OP's situation. $5000 no interest spread over 24 months. Suppose an average minimum required payment for that amount of $125 paid for 23 months, and the remaining balance of $2,125 paid in month 24. If you calculate the NPV given a guaranteed rate of return of 1%, the OP would only pay the equivalent of $4,230.56 out of the original $5,000, effectively saving 15.39% of the money paid. How on earth is saving $769.44 not worth the hassle of taking out another credit card? Do you really consider $769 a 'petty sum of money'?

[user_id]

Originally Posted by CaptainNJ

i think im going to get a new credit card with a nice no interest timeframe and pay the minimum, then the balance at the end. will be fun to see the extra money in my account. wont cost me anything.

Yeah....so fun:

Account A.............. Account B

$10,000................ -$10,000


Net: $0

[user_id]

Originally Posted by hnsq

If you calculate the NPV given a guaranteed rate of return of 1%, the OP would only pay the equivalent of $4,230.56 out of the original $5,000, effectively saving 15.39% of the money paid.

I think you may want to review the chapter on NPV... I seriously wonder where you think the $769 magically materializes from.

[elamigo]

Originally Posted by Rod_moore

I paid off all my cc debt last year, and I'm in the process of prefecting my credit score. It's not HORRIBLE but its not the BEST either. However, I recently just bought a new place and went furniture shopping, I was approved for 5,000 and 24 months no interest. Sounds kind of good to me, but I'm also a little leery of doing the consumer debt thing again.

What are your thoughts on these 6/12/24 months no interest deals? Are they really worth it? Also,Is it good for credit scoring?

If you are sure you will be responsible in payin the debt in time to avoid any interests, it is a good deal.

However, I believe people in general have become so undisciplined with their money and also irresponsible with paying their debts that businesses are aware of this. They know many will not pay in time and then the interests profits will come in. It is a good business strategy. If people were more responsible businesses would not have to use that strategy. It is up to you how responsible you will be. I have taken advantage of that and have never paid any interests, take care.

[hnsq]

Originally Posted by user_id

I think you may want to review the chapter on NPV... I seriously wonder where you think the $769 magically materializes from.

All assuming 1%

Column 1 = month number
Column 2 = monthly payment
Column 3 = NPV equation for that month

1___$125 ___ =125 / 1.01^1
2___$125 ___ =125 / 1.01^2
3___$125 ___ =125 / 1.01^3
4___$125 ___ =125 / 1.01^4
5___$125 ___ =125 / 1.01^5
6___$125 ___ =125 / 1.01^6
7___$125 ___ =125 / 1.01^7
8___$125 ___ =125 / 1.01^8
9___$125 ___ =125 / 1.01^9
10__$125 ___ =125 / 1.01^10
11__$125 ___ =125 / 1.01^11
12__$125 ___ =125 / 1.01^12
13__$125 ___ =125 / 1.01^13
14__$125 ___ =125 / 1.01^14
15__$125 ___ =125 / 1.01^15
16__$125 ___ =125 / 1.01^16
17__$125 ___ =125 / 1.01^17
18__$125 ___ =125 / 1.01^18
19__$125 ___=125 / 1.01^19
20__$125 ___ =125 / 1.01^20
21__$125___ =125 / 1.01^21
22__$125 ___ =125 / 1.01^22
23__$125 ___ =125 / 1.01^23
24__$2125___=2125 / 1.01^24

Do the math from column 3, the total equals$ 4,230.56. NPV of paying all at once is $5,000 (obviously).

$5,000 - $4,230.56 = $769.44.

Dude - it is basic math. Let me know if you need help computing the values in column 3. I can do it, but I don't want to take that much time typing out all of the answers for each period in this thread. Copy the third column (after the = sign) into excel and do the math yourself.

[CaptainNJ]

Originally Posted by user_id

Yeah....so fun:

Account A.............. Account B

$10,000................ -$10,000


Net: $0

i will probably make a few bucks on the deal, nothing major. but there is no interest expense, so i cant lose. the important thing is account A looks bigger, account B will get paid when it should get paid.

[bradykp]

Originally Posted by CaptainNJ

i think im going to get a new credit card with a nice no interest timeframe and pay the minimum, then the balance at the end. will be fun to see the extra money in my account. wont cost me anything.

these offers are picking up quite a bit again. chase just sent me one where i'd get $200 for opening the account, and 12 months no interest on purchases. looks like the banks are OK again. lol