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Why 0% Interest Are Scams

April 30, 2021

Why 0% Interest Are Scams

Who wouldn’t be enticed when you hear the word 0% interest when purchasing something on an installment basis? A lot falls into this trap, thinking how much savings there is from not having interest. Thinking about it carefully though, what do businesses gain from this? Are they just being nice? Do they just want to have more sales or is this simply a very good business strategy?
Basically, you still pay interest even if it says 0% interest on installment. An example would be:
Cellphone price: ₱13,990.00Installment monthly price for 12 months: ₱1,290.83 x 12 = ₱ 15,489.96Total Price difference: ₱1,499.96
That may not be that big of an amount for some but with other purchases costing around 30k+ or 50k+, the price difference grows larger and larger. Thinking about it 0% interest isn’t exactly 0% since you still end up paying more. 

Here are some tips on how to save some money:

1. When buying a car, especially your first one, choose a used car.

Base on the prices in the market, the first 10,000 miles on a car are the most expensive. You can take advantage of the price drop when you go to buy the car. The car’s value will not have gone down much, but the price will when buying used. You can always inspect the car for its condition.

2. It’s always a good idea to create a budget monthly.

It’s good to prioritize Savings, then Bills and Expenses, and whatever’s left is for your Wants. An example would be 30% of your income to go under Savings, 50% for your expenses, and 20% for your wants. You can tweak it to your preferences and needs.

3. Wait for a SALE.

There will always be news things like gadgets or products in the market but it doesn’t mean that you have to get it as soon as it comes out. It’s a good idea to wait for that specific item to go on sale. Time is definitely gold.

4. Plan your meal for the whole week.

It will not only save you time but also helps avoid spending more on food. Buying a week’s worth of ingredients and produce also saves you some money, time, and effort.

5. Invest in education.

It’s almost certain that a college graduate will always earn more than a high school graduate. Investing in your education is investing in your future earnings. There are even professionals who still choose to further study to learn new skills and further increase their capacity to earn.

6. Consider paying in full when you have the cash to spare instead of installments using a credit card.

It’s an illusion to say how you won’t feel the price by paying in installment. In the long run, you’ll see how much savings you could have gotten instead. Why not save some money for you to be able to buy something you want first?

7. Uninstall those shopping apps.

Some may say how they only add to the cart but don’t checkout. Truthfully though why torture yourself if you can simply avoid seeing those temptations? Having those apps simply spam you with notifications and tempting you to look into unimportant items.
These tips are quite easy to follow and definitely applicable to most whether well off or not. You can enjoy life without worrying about your personal financial situation all the time.

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