The minimum monthly payment is the larger of $10 or 1% of the card balance. Even though you aren’t responsible for paying interest for three years you will be responsible for the total accrued interest over three years if the balance isn’t paid off at the end of your promotional period.
Is this a good deal?
This is very simple. It’s a good deal if you pay off the entire balance before the promotional period is up. It’s not a good deal if you carry any balance over past the promotional period.
The reason it isn’t a good deal is that the compounding interest over three years is significant. You could say that you’d be taken to the cleaners under this scenario. How much depends on your initial purchase price.
Analysis of purchase price, sales tax and interest rates
Because I’m not a banker or financial analyst I needed some external help so I downloaded an Excel credit card payment calculator from Microsoft. (visit site)
For the purpose of this analysis I used a default sales tax rate of 8.25% and Best Buy’s lowest advertised variable standard APR of 19.8%. I also rounded off to the nearest dollar. So, these estimates are on the low end.
- $999 HDTV has a final purchase price of $1081. If you make the 1% minimum payment for 36 months you will have a remaining balance of $753. The interest accrued over that time would be approximately $541.
- $1500 HDTV has a final purchase price of $1624. If you make the 1% minimum payment for 36 months you will have a remaining balance of $1044. The interest accrued over that time would be approximately $813.
- $2000 HDTV has a final purchase price of $2165. If you make the 1% minimum payment for 36 months you will have a remaining balance of $1508. The interest accrued over that time would be approximately $1084.
- $3000 HDTV has a final purchase price of $3248. If you make the 1% minimum payment for 36 months you will have a remaining balance of $2261. The interest accrued over that time would be approximately $1627.
- $4000 HDTV has a final purchase price of $4330. If you make the 1% minimum payment for 36 months you will have a remaining balance of $3015. The interest accrued over that time would be approximately $2169.
Needless to say, the accrued interest is expensive and hopefully by seeing these numbers you’ll plan on paying off this balance before the promotional period expires.
How much do you need to pay each month to pay off the balance?
This one is a little easier because interest isn’t a factor for the first 36 months. Therefore, your monthly payment would be the initial purchase price divided by 36 months since the promotional period is 3 years.
- $999 HDTV – Monthly payment would be approximately $30.
- $1500 HDTV – Monthly payment would be approximately $45.
- $2000 HDTV – Monthly payment would be approximately $60.
- $3000 HDTV – Monthly payment would be approximately $90.
- $4000 HDTV – Monthly payment would be approximately $120.
The key thing to remember with this promotion and many zero interest promotions is to get that promotional item paid off before the promotional period expires.
For specific information regarding your account or the promotion please contact the appropriate business or financial institution.