bluntmoney.com

I confess that we are currently taking advantage of a 12 months-same-as-cash type offer. We did so because we thought we’d rather earn a little interest on the money that’s sitting in our bank account, instead of paying it out up front.

I felt comfortable with the idea at the time, because we had (and still have) the money. We just didn’t want to pay for what we bought with it yet. But I don’t think I’ll be doing that again in the future, and here’s why:

1. Yes, we have the money, but we’re still making payments on something. I hate payments. I don’t like something hanging out there, being owed.

2. The offer makes it easy to have a distorted view of reality. Because the money is still sitting in the bank, and we see the amount every month, it feels like we still have the money — even though for all intents and purposes it’s already spent. It’s too easy to feel better off than we actually are.

3. There is a big potential for error, and of course everyone makes mistakes. But in this case, making a mistake (paying a payment late or not having the entire balance paid in full by the due date) could be very costly. That 0% rate would jump to something like 25% overnight — and not just on the remaining amount. We would be charged 25% on the whole amount that we borrowed. It’s silly to be tempted by the possibility of earning, what 1% interest in exchange for the risk of paying 25% interest.