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Poordad · Posted: Tue Jan 22, 2008 4:16 pm Subject: Help me understand!!!!

Hello all. I need your help understanding what this person I know has done. He needed a new washing machine and he with to the big blue boxstore and got there credit card and got the washer. We were talking at lunch time and he was saying how he had to wait for some 1099 forms. Someone ask what do you have 1099 for. The reply was that they had CD in the bank.
My question is why would someone take on consumer debt when they have CD's. Wouldn't you think that you would save money in a saving acct first before you start getting CD's? I have a $1000 in a saving acct. so that i have money for emergencies like this.

Posted: Tue Jan 22, 2008 8:14 pm Subject:

Maybe the purchase qualified for interest free for X amount of time?

Posted: Tue Jan 22, 2008 8:24 pm Subject:

Who knows what their thinking is but I do know that many of those store cards do run 0% interest for so many months so Lone Gunman might be right.

I do agree with you about using your saved money first but that is only because I got into trouble with credit. Maybe they haven't???

Posted: Wed Jan 23, 2008 8:10 am Subject:

There are a ton of people that would rather take out store credit then use cash for purchases . . . . It can be very dangerous behavior.

But I agree that if you haven't gotten into to trouble with credit in the past, you probably wouldn't think twice about taking more out instead of using cash for large purchases.

Posted: Wed Jan 23, 2008 9:19 am Subject:

Maybe he can pay it off before the interest is added on the to card. If there are no other added fees etc..it might be a good deal. If he needs the appliance now and will have the money later...it makes sense.

poordad · Posted: Wed Jan 23, 2008 3:43 pm Subject:

I have looked at the big boxstore credit app. and the interest rate at the time was around 23%. My thinking is, why pay 23% when you only get around 4 maybe 5% on a CD. Why dig a big hole when a small hole will do!
I have looked over alot of post and i"ve have not seen much on saving for things you would like to have. My dad told me "If you can not pay cash for it, then you don't need it. Sure people need loans for a house or a car.

Posted: Wed Jan 23, 2008 3:48 pm Subject:

I worked with a lady and she and her husband always bought furniture and appliances on the 6 month no interest plan and paid it off within that time frame.

ladybug

Posted: Wed Jan 23, 2008 5:57 pm Subject:

Poordad, their standard interest rate may be 23% but as I said, many of them run "no interest for 6 months" specials on big ticket items. If you think about it, your money sitting in a CD at 5% will make you money in the 6 months until the card needs to be payed off. If you paid cash you'd actually be loosing money (the 5% from the CD), of course they are counting on you not being able to pay it in full in the 6 month time frame.

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