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Taking Advantage of Intro APR on Large Purchases


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    Introductory APR deals often seem like a gimmick that's too good to be true, but if you are smart with your payments then they can be a great way to help you purchase big ticket items and pay for them over time instead of in one lump sum.

    I've taken advantage of these low or zero APR deals a number of times and, after once learning the hard way what happens if I don't pay off the entire debt before the period is up, have learned to break down into equal monthly payments the amount needed to pay a purchase off before the introductory APR is up.

    If you decide to take advantage of one of these deals, it's imperative you don't focus too much on the minimum amount due each month because that is typically far less than the amount you'll need to pay each month in order to pay the item off in time. Let's say you purchase a couch and love seat for $4,000 with a 36 month same as cash APR offer. The minimum monthly payment may only be $50/month, but you would need to pay $111.11/month in order to pay off the purchase within the 36 month window.

    So, it's important to do the math before you make a big purchase where you take advantage of an introductory APR offer. The simplest way to do that is divide the total cost by the number of months in the offer to figure out how much you would have to pay each month to pay it off in time. If you are able to make it work then these offers are a great way to pay for big purchases over an extended period of time.

    Just make sure you don't overextend yourself because if you don't pay off the purchase in time then you'll be introduced to the world of compounded interest, which I wouldn't wish on my worst enemy.

    Has anyone taken advantage of one of these offers to make a big purchase? If so, were you able to pay it off in time or did you find yourself staring at a big bill you weren't expecting?

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    Great thread! Yes, I've done this a few times myself. One or two times with a rather large piece of furniture, and some gadgets from Best Buy. I totally agree, these are great when it comes to big purchases as long as you pay it off before the no interest period expires. They also help to bolster your credit score if you stick with the plan.

    One other thing is if you have a little extra money to blow, throw it on your next monthly payment. Even $50 extra, on top of your calculated monthly payment, adds up.

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    If you aren't on the ball with it, it can certainly get out of hand, like you suggest. And that's exactly what the lender wants. They want you to pay just the minimum and then find yourself owing them huge interest payments after the intro period ends.

    But as long as you don't fall into that trap, 0% intro offers are great. I prefer 0% intro offers from credit cards that are accepted everywhere (VISA, AMEX, Discover, etc). That way I have the most flexibility to spend and take advantage during the intro period. And aim for the longest intro period, like 15-18 months. At least 12 months.

    Getting dept store offers like that to me are far less appealing. You are limited to using them at just their store. Guess it depends on what you are using them for. The only dept store card I have is a Best Buy card. Would consider using it for a large purchase, like a new computer, especially if they offer some deal for using their card, like 5% off or something. But would pay it off almost immediately.

    Generally speaking, I think if you don't have the money already to buy something expensive, you probably shouldn't be buying it. I have used 0% intro offers from CCs as a method of paying off debt. And try to avoid falling into more debt where you get to push off the due date. But either method can work, if you are responsible.