Beware of the "12 months same as cash" offers.

This may be a tempting way to get new furniture or carpeting into your home and for some people who are disciplined enough to budget their money, this works very well for them.  However, if you fail to pay off the full amount of the purchased items within the 12 months, the outstanding balance is converted into a high interest loan (usually between 24-30%) and you are back charged the deferred interest from the purchase date.

For example: Say you bought $2000 worth of furniture in December for Christmas under a “12 month same as cash” promotion.  You pay a little at a time all that next year and come December again you only owe $200 on the furniture balance.  In January, you will probably get a payment book from the furniture store finance company for a $740 loan at 25% interest.  The loan amount comes from the $200 that is still owed on the balance and 25% interest on the initial $2000 accrued monthly (about $540), deferred from the original date of furniture purchase.   It does not matter if it is 12, 18 or 24 months same as cash, if the entire balance is not paid in full at the end of the term, an accrued interest balloon payment is added to the remaining balance at a high interest rate.  If you take advantage of a "same as cash" offer,  insure it paid in full before the term is over.  Use a personal line of credit,  credit union or even a cash advance on a credit card to avoid the extra hundreds or even thousands of dollars  in deferred interest.

Avoid “Payday Loans”

"Payday" loans are small, short-term loans made by check cashing enterprise or similar businesses at extremely high interest rates. Typically, a borrower writes a personal check for $100-$300, plus a fee, payable to the lender. The lender agrees hold onto the check until the borrower's next payday, usually one week to one month later, only then will the check be deposited. In return, the borrower gets cash immediately. The fees for payday loans are extremely high: up to $17.50 for every $100 borrowed, up to a maximum of $300. The interest rates for such transactions are staggering. When an interest rate is quoted for a consumer loan at a bank or advertised for a credit card, it is given as a APR (annual percentage rate). The pay day loan rate when calculated annually is 911% for a one-week loan; 456% for a two-week loan, 212% for a one-month loan. Do not use ‘pay day’ loans.  Again, try a credit union, or a personal line of credit with a local bank.  Even a cash advance on a credit card would be a better alternative.