by Daniel Simon
I am two short months and decent-sized payments away from paying off my electronics-based credit card bill. For the last three years, I have put some things on it that were necessary (laptop & desktop), arguably necessary (GPS), and arguably unnecessary (flat-screen television). All of the items were purchased at times that offered great discounts, as well as great financing terms – same as cash for a long period of time. Over the course of time and bill cycles, I have received several statements that inadvertently added interest. Be aware of the pitfalls of repayment terms for same as cash offers.
One pitfall is having multiple same as cash offers concurrently on one card. This scenario can cause issues with interest if you don’t make the minimum payment towards every same as cash purchase. For example, the overall minimum payment on the bill may be less than the minimum payment you need to make for each of the same as cash purchases. This will cause you to incur interest payments. In this case, I learned to add the minimum payments together to make sure the minimum necessary payments for the four different same as cash offers were covered with my payment.
Another pitfall is the sixty-day rule. Within sixty days of the end of the same as cash agreement term, the credit card company was taking all of my payment towards that purchase. This left me interest to pay on the other agreements on the card. It took several months, and several representatives for me to find one who actually explained the process accordingly. What you need to be aware of is that there is a possibility, depending on the credit card company and the small print on your bill, that additional funds from your payment could be prioritized differently, thus having you incur interest charges if your payment was too close to the minimum.
Most importantly, the pitfall that can cost you the most money on same as cash agreements is not making final payment by the end date of the agreement. You won’t be responsible for just one month’s of interest on the agreement, but for the interest on the entire agreement time frame. To use a gambling analogy, credit card companies are betting against you. The card companies gladly provide you with terms for same as cash, knowing that there is an opportunity to forget to make a payment or that you won’t be able to cover the overall purchase within the agreed time period. If they “win,” then you will have added interest payments that may amount to more than what you paid for the item or service purchased.
The lure of same as cash offers can be incredibly tempting. Utilizing the offer responsibly can help you obtain items & services for immediate use. However, it is important to be educated on how the agreement works regarding payment options and how interest accrues. One suggestion I can make is that if you do not understand your bill, or you believe interest has been charged incorrectly, please call the credit card company and speak to a representative or several representatives if that’s what it takes, to understand the charges. Choose wisely the agreement plan that best suits your needs and make the appropriate, timely payments. Always read your bill carefully, so you can avoid paying any additional costs, as “same as cash” can become “hand over more of your cash” pretty quickly.