not really... CC offers a 0% interest installment plan on Courts or any other shops...
Not true. Where in the world wouild a Credit Card company not make money or give you something for nothing. Well that is what every bank would want you to think so.
They will make money from you in one way or another. And in this case of the 0% of course they make money from you too apart from what they will get from the retailer.
Say we have 2 persons with credit cards. One has a new card with a 5000 credit line to it and the another have the same 5000 limit but have used up 2500. They both go into a camera shop to buy a camera each. Say it cost 3000. Who do you think will qualify for the 0% instalment from the CC company? The first one would as he have 5000 unused thus they can straightway deduct the 3000 from his 5000 available credit line and work out a instalment repayment plan.
For the second guy, he will not as his balance available is only 2500. Short 500. I don't think a tempoary credit increase can be use for this as a credit limit is only for 30 days ( these days..last time citibank give up to 3 month but heard it was so abuse that they stop it..far as I know) .So the second guy will not get the 0% from the CC. ( Unless he top up his card to have more then 3,000 balance less)
This is the problem...alot of people don't know that you must have the available credit balance left in order to get qualify for that 0% scheme. It is NOT A SEPARATE credit amount from your existing credit line. WHY not? Well this is how they make their money!. They will make you pay for the interest from that 3000 they deducted from your CC's credit line of 5000. It is like holding that 3000 as "hostage" till you finish your full instalment payment. I hope I explain that correctly.
As you know, how much you charge to your CC is what interest will be calculate each month. And what balance you still owe them, you could fully repay it all back and 'reset' your credit line to it's original amount or as MAJORITY would do ( as bank would gamble you will do this) you only pay the minimum sum each month. Doing so of course would mean you have alot still left unpaid..this is where the bank love you for it as this is where they make their money on the interest you still owe and the late payment if happen to past the due date for making payment. With citibank for example...each card you have with them..if you are late. Say you have two cards.. each will cost you $50+ in late fee. So just being later a day, you already down an additional 100+! plus addition of the interest on what's owed...and lord knows how much more that would be depending on what portion of the credit you have used up and also imagine you have 2 credit line with a few banks at the same time. It works out to a sum that you could have easily bought a 18-200mm Nikkor VR zoom by cash each month!
So that means since you bought the $3000 item, your credit card only have 2000 left for use for other things. Now even ifyou don't use the card and keep the balance at 2000, the 3000 you use up for the instalment will bear interest which you have to pay. SO!!~ silly don't you think when they say you pay "0%" but you actually do indirectly .....plus whatever late payment if you don't pay the instalment on time! Welcome to the real money world of banking. So you pay, the minimum sum for each month's payment in interest for whatever you use to purchase with your balance 2,000...PLUS... the monthly instalment amount ...AND PLUS....if you are late there is the late fee as well. It all adds up.
Now each month you pay back, your credit balance will get "replenished" so by the time you complete your 0% instalment in a 6 month, 1 yr or 2..for example, well you slowly get it back up to 5000. ( if you never use the card at all that is.)
Another reason why they do this is really to kick people started to using the card. What better way to offer it to get you going is to tempt you with your own desire for some big ticket item broken into smaller repayments. heh The idea is once you start...there will be a ( maybe large?) percentage of those who will keep doing so. That's why they do all those kind of advertisement. They are suppose to appeal to your wants and your needs. (remember that wonderful ad where they show a son buy his old dad a Harley Davison...touching yes?) Ad like this don't call out to your sense of logical and frugal thinking about the good and bad of spending on borrowed money.
I saw this documentary not too long back which is not shown here nor was it on cable as it is very anti-bank in the US and it involves a number of world big name banks. It it said banks have a name for a group of borrowers they hate. The bank calls them "dead beat" if I am not mistaken. It may surprise you to know that those folks they call "dead beat" are the ones who use thier CC responsibly, pay on time and never default on their repayment. They hardly make much more on them. The one banks love are those that use the cards, max out the card, owes the card balance and are late. This is really where they make the money.
So...think carefully before you start believer that in these world, you can still get freebies from BANKS! heheh....
Does everyone know which part of the bank business is their biggest life blood money earner? ..Credit card.