90 Days Same as Cash: Not Always a Great Deal

Article Summary:

“90 days same as cash” is basically another phrase for no-interest financing where a store allows you to make interest-free payments for three months. While this can be a convenient way to pay for purchases over time, it can also put you in a pile of debt and financial trouble if you don’t think it through Here’s what you need to know.

Whether you’re shopping in-store or online, you have probably come across new types of interest-free financing. You may have seen these offers from shopping apps like Afterpay or in furniture stores where not everyone has the cash readily available to make a lump sum payment on a much-desired couch. Or you may have seen the option of “90 days same as cash.”

There’s a lot of appeal to this advertising gimmick, and many stores see their sales volume rise considerably with this interest-free offer. Not only do you feel like you’re saving money, but you can also feel like you’re beating the system and getting a free loan for 90 days.

But how smart is this financing option? Are you actually saving money in the long run? Keep reading to learn what “90 days same as cash” means for your immediate and long-term financial situation. We’ll also explore alternative financing options to a “same as cash” offer.

How does “90 days same as cash” work?

Whenever the store extends a “90 days same as cash” offer, they’re simply allowing you to make a purchase with no payments and without accruing interest for the next 90 days. You can think of it like a grace period on a loan, where you aren’t required to make any monthly payments for a certain period of time.

If all goes as planned, you can finance your purchase and pay off the balance in the promotional period before interest accrues. But what happens if you can’t pay off the remaining balance in just 90 days? In most cases, that’s when the deferred interest kicks in.

If you don’t pay off the remaining balance, the interest on your purchase will be backdated to the purchase date and added to the balance. This means you only have 90 interest-free days to avoid interest payments altogether and keep your interest-free advantage.

Example:

Let’s say you finance a 90-day purchase for a $3,000 couch at your local furniture store. If you clear the entire amount in 90 days, you’ll avoid paying any interest.

However, maybe you can only afford to pay $1,500 in the first 90 days. In that case, you’ll have to pay interest on the entire $3,000 and not only on the remaining $1,500.

“Same as cash” interest rates

Unfortunately, because the lender is taking a large risk by deferring payment, the interest rates on these deals can bey high. Even though some states cap interest rates on “same as cash” deals, not every state does, leaving borrowers to pay as much as 20% or 25% in interest.

Though not as bad as a payday loan, many people will have trouble paying back that kind of money, especially since the interest is charged on the original price of the purchase. With this in mind, it’s best to avoid “same as cash” deals unless you’re confident you can pay the remaining balance within 90 days.

Pro Tip

“Same as cash” could put you in debt if you aren’t careful. After all, you’re essentially buying something with the “assumption” that you’ll have the money to pay for it in the future. But if you’re not careful, you could just sink further into debt. Always ensure you read the fine print of any financing offer.

Pros and cons of “90 days same as cash” financing

It is important to consider the advantages and drawbacks before you make up your mind about a “90 days same as cash” offer.

WEIGH THE RISKS AND BENEFITS

Here is a list of the benefits and drawbacks to consider.

Pros
  • Could allow you to purchase larger, more expensive items
  • Don’t have to pay any interest for 90 days
  • Also not required to make any payments for 90 days
Cons
  • Deferred interest will kick in if you don’t pay it off after 90 days
  • Interest rates for these purchases are often very high

Alternatives to “90 days same as cash”

If you need some extra financial help to make a large payment, you don’t have to rely on “same as cash” financing that may hurt more than help you. Instead, consider one of the options below to

Credit cards

Though some credit cards have interest rates that compete with those of “same as cash” deals, that’s not the case for all cards. Even if you have to pay interest, you’ll only accrue interest on the outstanding balance and not on the entire purchase value. Not only that, but you can also find ways to lower your monthly payments on a credit card through 0% APR introductory offers.

You can save on interest with a 0% APR introductory credit card. During an introductory period, you won’t have to make any interest payments on your balance. While this may sound similar to a “same as cash” deal, this introductory period typically extends for more than a year, giving you plenty of time to pay down your balance. If this sounds like a good option to you, use the tool below to start comparing 0% APR credit cards.

With a balance transfer card, you can transfer a credit card’s balance and save on interest payments. You’ll have between 14 and 21 months to pay down your balance without accruing any interest. However, some balance transfer cards will charge you a fee to transfer your balance, sometimes between 3% and 5%. Make sure to keep this in mind before opting for a balance transfer card.

Personal loan

If you prefer to avoid credit cards altogether, you can also apply for a personal loan at your financial institution. Personal loans can be a great way to finance a large purchase you can’t pay off in 90 days and get a competitive interest rate. Of course, the exact rate will depend on your credit score, the loan amount, and the loan term. However, if your credit score is in decent shape, you should be able to get a low-interest personal loan and save yourself some money.

To see what interest rates your credit score may qualify you for, input your score into the comparison tool below. If the estimated interest rate is too high, you may benefit more from boosting your credit score and saving money before making a large purchase.

Savings account

Sometimes the best alternative to a large purchase is to wait and save. Rather than putting your bank account in the red to buy a new coffee table, put that money into a savings account and wait until you can make the purchase in cash. You can help yourself save even quicker by using a high-yield savings account or automatic payments.

Though most savings accounts allow your savings to build between 0.05% and 0.15% in interest, a high-yield savings account offers 1% to 3% instead. While this may not seem like a lot, that’s a huge difference in the savings world.

With automatic payments, you can set up a recurring transfer that will move some funds from your checking account to your savings account. You can schedule these transfers to occur the day you get paid or at the end of the month. Take a look at some of the savings accounts below that offer this feature and start building your savings today.

Is “90 days same as cash” ever a good option?

Though we’ve stressed caution throughout this article, “90 days same as cash” can be a great financing option if you know you have money on the way. For instance, if you’re about to receive your tax refund or cash out from a CD account, you can make a large lump sum payment and pay off the entire balance in one go.

The most important thing to remember is to make sure you will be able to afford the full payment before the 90-day deadline. Try to have more than one way to pay off a purchase to avoid surprises. Maybe you thought that refund was coming within the 90-day period, but you won’t actually get it until later. Now you could be stuck paying hundreds of dollars in deferred interest.

Key Takeaways

  • “90 days same as cash” is a financing tactic some stores use to incentivize larger purchases. The offer provides customers with a 90-day period where interest does not accrue interest (if paid in time), and no payments are required.
  • This financing option is only beneficial if you can pay off the remaining balance within 90 days.
  • If you can’t pay off the entire balance, you’ll have to pay all the deferred interest on the item’s original purchase price.
  • The interest on a “same as cash” purchase can be higher than on some credit cards, sometimes reaching 20% to 25%.
  • Ultimately, such services only benefit the company and not the customers. So, the easiest thing for you to do is pay cash outright. No matter what you have to buy, save and pay money for it.
View Article Sources
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  3. FTC Sends More Than $172 Million in Refunds to Consumers Misled by Rent-To-Own Provider Progressive Leasing — Federal Trade Commission
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  6. How to Lower Monthly Payments — SuperMoney
  7. Best Credit Cards With 0% APR Intro Periods — SuperMoney