Store financing offers like 0% down, pay nothing for 6 months, etc, can be a way to lure those who really shouldn’t be buying stuff into purchasing, but if you actually have the cash in hand already, you can leverage them into the equivalent of an interest-earning free loan.
Here’s how one guy says he does it:
Whenever I buy a big ticket item, I make sure I have the cash to pay for it. Then I wait for store financing offers — same-as-cash or deferred interest for an extended period. I opt for the financing, put the cash in a (certificate of deposit) that matures just before the end of the promotional period, and pay it off before the deferred interest becomes due. It’s like a free loan from the stores and I can earn interest while I enjoy the item!
“Circuit City recently had a special (of) no payments until January 2008. I bought a flat-screen TV, the camera I’ve been ogling for two years, and a bunch of other little things I needed, like printer cartridges. Total $2,500. Put $2,500 in 2-year CD earning 5.25% APY. That’s $262.50 I’ll earn during that time.
If you’re disciplined, good with calendars and spreadsheets, and cash-flush, this store financing arbitrage can be a good trick. Just make sure the item is something you need and can afford in the first place. No sense in buying something useless just to feel clever about your L33t money hack skills.
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