You know the old saying, “When Something Seems To Be Too Good To Be True, It Usually Is.”
Companies want you to buy their products, and they will frequently make offers that seem too good to pass up.
Just remember, these deals will always benefit them, not you.
For interest, the No Interest For One Year, No Money Down, deal. They know, based on statistical models, that odds are that you will NOT have paid off your loan one year from now. So suddenly your interest rate will shoot up sky high and whatever you bought at that “bargain price” costs you as much as 25 pr 30 percent more than you thought you were paying for it.
Also, if you are making minimum payments during that “no interest” grace period and you are a day late with ANY of the payments, chances are you need to start making payments again immediately.
What about those balance transfer deals where you can transfer all of your high credit card balances to a card with low interest rates?
There are all kinds of potential pitfalls there. First of all, if you have a hard time controlling your spending, odds are that you will just run your credit card balance right back up again on those cards that have high interest rates.
Secondly, again, these low introductory rates don’t last forever, so when that grace period is up, you will be socked with high interest rates on this new credit card – and opening up new lines of credit can hurt your credit rating – so you saved a little bit of money with lower interest rates for six months, but hurt your credit rating which can cause interest rates on all of your other cards to rise.
So what to do? Do NOT open new credit lines unless it is an absolute emergency. And an emergency means unless you are about to lose your house or have your power turned off, not that Christmas is coming and you want to buy a bunch of pricey gifts, or you really want a new big screen TV or jet ski or designer purse.