Retailers need customers, particularly retailers that sell pricey items. They need people to come to their location and purchase their products, but some customers might not have ample cash on hand to buy now, and maybe their available credit is limited. Enter the “90 days same as cash” promo. You can make payments on a large purchase from an appliance store or furniture store over a few months, and you’ll pay no interest on the balance during that time.
You might be tempted to grab such an offer, particularly if you really need – rather than just want – the product in question. But another familiar phrase can come into play here: Buyer beware.
How Does “90 Days Same as Cash” Work?
You’re effectively borrowing money without paying interest when you enter into a "90 days same as cash" deal as long as you pay off the loan on time. You can take the product home without making a cash, debit card or credit card payment, and interest is deferred for a period of time, often 90 days. However, you must pay the balance due – the full purchase price of the item – within that period of time. Interest payments come due otherwise.
What if You Don’t Pay Off the Balance Within 90 Days?
You’ll have the cited time period to pay off the product you purchased. You must pay it off in full to avoid paying interest. Maybe you bought a refrigerator for $2,400. You must pay that $2,400 within the time period allowed in order for the purchase to be treated as though you paid cash; no interest is due in this case.
However, according to American Financial Solutions, almost 90 percent of consumers who enter into these deals aren’t able to pay off their purchases within the allotted time. AFS also indicates that your interest rate will be somewhere in the area of 25 to 28 percent or even higher. Interest will continue to be charged and accrue until you pay off the entire balance, including the interest charges owed.
If You Don’t Pay in Time, You’ll Lose Those Interest-Free Days
Here's the catch: Interest doesn’t begin to accrue at that 90-day deadline. It’s charged going back to the date you entered into the deal and took the product home. Your account balance will increase exponentially to include months and months of deferred interest. You’re just not paying the interest up front.
This can be a painful hit if your deal was “12 months same as cash” rather than 90 days. These offers can be for three months, six months, nine months, 12 months or anywhere in between or even longer.
Your Purchase Must “Qualify”
Your purchase must typically amount to more than a certain dollar amount for it to qualify for this type of financing. Retailers, merchants and dealers are often willing to help you along in this regard because they tend to mark up the purchase price of qualifying items in exchange for waiting for the money.
The price isn’t always prohibitive, however. Pointe AutoTech offers 90 days same as cash financing on auto parts that’s available on a special credit card for purchases over just $150.
Read the Fine Print and Do the Math
Be very sure that you know what you’re getting into when you enter into one of these loans. It’s not unheard of that some same-as-cash offers that extend longer than 90 days will require monthly principal payments on the cost of your purchase.
You might have 12 months to pay off that $2,400 refrigerator at a required rate of $150 a month. The problem is that $150 over 12 months only totals payments of $1,800. You can make every payment promptly, but you’ll still end up owing all that interest because you haven’t paid off your purchase in 12 months. There’s still $600 outstanding.
How Saving Is Better Than Financing
It's probably more feasible to simply save up for big purchases, but of course, this may not be possible if your refrigerator has just gone toes-up or if you’re on the road and suffer a major loss that prevents you from getting home unless you spend that money right now.
Can you borrow money from a family member or friend? Or perhaps you can take out a personal loan instead. The interest rate will no doubt be much kinder if you don’t think you can pay off the purchase in the requisite amount of time. Even using a credit card would most likely be gentler on your budget, or you might consider buying a used product to cut yourself a break.
How to Apply for "90 Days Same as Cash"
Applying for this type of financing typically involves doing so directly with the merchant, retailer or dealer. You’ll have to complete an application. A check into your credit report, credit history or credit score may or may not come into play. But they’re offering these deals because they want to sell you the product, so the application process is often just a formality, providing them with billing information and identification in the event that you don’t pay off the purchase in time or at all.
Frequently Asked Questions
How Can I Get a Deal on Furniture or Appliances if I Don’t Have Cash Saved?
It can depend on the nature of your purchase. FTL Finance points out that your state or local government, utility company or some manufacturers offer rebates for certain items, particularly energy-saving appliances. You might be safe entering into a 90-day deal if you’re very, very sure you’ll receive the full rebate amount within the allotted time so you can pay off the purchase with that money.
The same applies if you’re expecting some type of bonus from your employer – as long as you don’t spend that money elsewhere.
Is "90 Days Same as Cash" Really the Same as Cash?
A same-as-cash deal really is the same as paying cash but only if you pay off the amount of your purchase within the designated time frame. It’s the same as if you had paid for the purchase in a lump sum. But interest will kick in otherwise, so you’ve actually taken out a short-term loan. The merchant, retailer or dealer is the lender because you’ve purchased the item in-store.
What Is "12 Months Same as Cash"?
All the fundamentals for this financing option are basically the same, but you’ll have a year to pay off the balance rather than three months. In addition, you might have to make payments toward the principal balance of your purchase, which, of course, isn’t really the same as paying cash.
What if I Pay Before 90 Days?
No interest will kick in if you pay off your purchase before the designated due date.
Beverly Bird has been writing professionally for over 30 years. She is also a paralegal, specializing in areas of personal finance, bankruptcy and estate law. She writes as the tax expert for The Balance.