Consumers Beware: 'Same as Cash' Is Only Good If

By Bauerlein, David | The Florida Times Union, December 6, 2009 | Go to article overview

Consumers Beware: 'Same as Cash' Is Only Good If


Bauerlein, David, The Florida Times Union


Byline: David Bauerlein

Shoppers looking for ways to stretch their budgets might be interested in those widely offered "same as cash" promotions that charge no interest if payments are made on time.

If you play your cards right, it's an attractive offer because you'll have time - three months, six months, a year, two years - to make payments without incurring the interest charges that come from swiping a bank-issued credit card.

But shoppers have discovered the hard way that there is a costly side to those deferred payment plans. If you fail to make the payment on time, a steep interest rate kicks in. The rate will vary by contract, but it's usually 24 percent to 30 percent, said Anita McKinney, who teaches financial education courses for the Duval County Extension Service.

Even worse for your household budget, the interest rate will often be applied to your purchase from the day you bought it. It won't matter if you've already paid off some or most of the cost. You'll still be charged interest on the entire purchase amount back to day one.

"It's not cheap money if you don't pay it off," McKinney said. "That's the real pitfall."

Earlier this year, the Federal Reserve considered banning those no-interest payment plans but decided to allow them provided there is more disclosure to consumers. Retailers argued the "same as cash" promotion is an option that benefits consumers overall. For instance, Sears Holding Corp. said more than 70 percent of its customers pay what's owed before interest charges are added to the bill.

So how can you keep from falling into the group that gets whacked by finance charges?

For starters, understand what will trigger that charge being added to your bill. The promotion might say "No Interest if Paid in full 12 months." That's one deadline. But the contract also might impose the interest charge if you fail to make monthly payments during that 12-month period. Don't expect the company to cut you slack on the payment dates. Good intentions don't count. If you're not organized with your personal finances, the no-interest plan will probably come back to bite you.

Even if the contract doesn't mandate monthly payments, you should still budget regular payments so you're not caught short when the interest-free period ends.

Also, find out when the clock starts running on the interest charge. If it goes back to day one of the purchase, the finance charge will cost you more - maybe a lot more - than if the interest only applies to what you still owe after missing a payment deadline. For example, let's say the cost is $1,000 and you've paid off $500 when you miss the deadline. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Consumers Beware: 'Same as Cash' Is Only Good If
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.