Beware promotional deals! A bad deal could land you in debt instead of getting you help with credit. There have to be good deals too, right? So how can you tell the difference between a good promotion and a bad one?
Beware Promotional Deals and Help With Credit
0% Interest Promotional Deals
Whether it’s furniture or a new car, there are often promotional deals offering terms like 0% interest for 60 months. This incentive seems great because you would save a lot of money by not paying interest on big purchases. It also sounds like an easy way to get help with credit.
What isn’t explained on those flashy commercials are the consequences for missed payments or other issues that may happen during those 60 months. Often times if a payment is missed or the balance is not paid in full by the end of the interest free time frame, then the borrower owes the interest they were originally avoiding in the first place.
Let’s say you are looking for a good deal on a car. The loan comes with the 0% interest rate, but you may not be able to negotiate the price. The 0% interest rate may be factored into the purchase price, so the dealer still gets the money they want in another way. Also, your monthly payment may be higher than you expected as they may give you a shorter time frame for repayment.
Are There Any Good Promotional Deals?
Yes! There are good promotional deals. Deals will vary so the most important thing is to keep in mind the following when evaluating a promotion:
- You understand all the terms of the deal.
- The conditions or terms are clearly spelled out in a contract. Don’t just take the salesman word for it. That deal might not actually be possible.
- Identify and need the benefit to you as the consumer, like help with credit.
If the deal is solid and you are able to commit your finances to it, there is a good chance for you to avoid some debt from the purchase that would normally come with it- like interest on a loan.
How Can I Make the Most of the Deal?
Understanding your own personal financial situation is key to making the most out of any deal and being able to avoid consumer debt.
- Be actively tracking expenses and budgeting. Make sure your finances can handle the purchase until you are paid in full.
- Sleep on it. Ask yourself if the purchase is worth making room in your budget?
- Look around the market and compare it to other deals. Can you negotiate with another company leveraging one deal over another?
Beware promotional deals is a good baseline. From there, you can evaluate the specifics of each deal. Being an informed and financially literate consumer can help you avoid troublesome deals. Evaluate yourself and the deal and find all the savings you can!
To speak to a credit counselor today about budgeting and managing your finances, call 800-769-3571.