Be Careful of 0% Financing At Retail Stores Like Lowes

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Most homeowners may already know this, but since I’ve never had to purchase a bunch of large appliances, I only noticed this recently while fawning over fancy appliances (Man, I’m getting old). When stores like Home Depot, Lowes, or Best Buy offer “No payments and no interest for 12 months”, it’s true, but with an interesting catch. If you don’t pay in full before that 12 months ends, they will charge you back interest for the full price of the purchase from the date of purchase, often at about 20% APR! It doesn’t just start accruing from when the promo period ends.

Here’s an example. You buy a nice stainless steel fridge and oven range for $1,500. You’re happy, paying nothing for 364 days. If you pay it off early, you pay $1,500. If you figure, well, I’ll wait after the whole 12 months is up and then start paying it off, you get to pay $1,800 ($300 more!)

And since you have to suffer a hard credit check anyways, unless you’re making a huge purchase, getting this 0% financing may not be worth it even if you do pay it off on time. Remember, hard credit pulls are worth money. It would probably be better to first purchase it with an existing rewards card and get 1-5%* cashback, and then pay off that card with cash or part of a (probably much larger) 12-month long 0% balance transfer that won’t charge you back-interest.

Best Buy offer terms:

No minimum purchase required.
Required minimum monthly payment is greater of $10 or 1% balance plus billed Finance Charges plus any late fees (if applicable). Interest will be charged to your account from the date of purchase if plan balance is not paid in full within 90 days or if minimum monthly payments are not made… Variable Standard APR = Prime Rate + 14.4 percentage pts. (22.4% as of 06/01/06).

Lowes offer terms:

*Applies to single-receipt, in-store purchases of $299 or more made now through July 9, 2006 on a Lowe?s Consumer Credit Card account. No monthly payments will be required and no finance charges will be assessed on this promotional purchase if you pay the following in full within 12 months: (1) the promotional purchase amount, and (2) any related optional credit insurance/debt cancellation charges. If you do not, finance charges will be assessed on the promotional purchase amount from the date of purchase and monthly payments will be required. Standard account terms apply to non-promotional purchases. APR is 21% (15.48% for purchases of $2,000 or more). Minimum finance charge is $1.00.

* 5% back at Home Depot, how do I do that? Well, it’s a bit round-a-bout, but you can by The Home Depot gift cards at grocery stores like Safeway using your Citi Dividend card that gives 5% back at grocery stores. Then just got to Home Depot and make your purchase! You may have to buy multiple cards in smaller amounts for larger purchases.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

User Generated Content Disclosure: Comments and/or responses are not provided or commissioned by any advertiser. Comments and/or responses have not been reviewed, approved or otherwise endorsed by any advertiser. It is not any advertiser's responsibility to ensure all posts and/or questions are answered.


  1. I have a store card that I’ve used twice to make large purchases. The company prints the last date of 0% financing on each bill. I put that date on my calendar and make sure I pay it off days before the 0% financing end date.

    • I have a store card too. I use these promos often, recently my hot water tank went, over $1500.00 but timing was good, got an 18 months promo which I always pay it off before deadline. My guess is many do not which is why these stores can afford to give basically free financing – I’ll take it. ?

  2. For the past umpteen years, I’ve been an absolute BANDIT with retail 0% APR offers! I’ve basically furnished my entire house with them.

    When you open one of these accounts with this type of deal, the “catch” that you’re referring to is explicity disclosed, so there really shouldn’t be any confusion about what you’re getting yourself into unless you failed to read the deal AND intentionally didn’t listen to the person opening your account.

    Anywho, the master plan to handling these types of transactions is to treat them exactly like the 0% APR balance transfers you’re so fond of. You put the dreamy appliances on the card at 0% interest, and you pay off $cost/term every month so your item is paid off before your back interest is applied.

    It’s unbelievably convenient for new homeowners who have just dumped all their free cash into equity but have the income to support an extra monthly payment.

  3. BestBuy’s card has “Two Cycle Average Daily Balance”…

  4. Another testament to the fact that you should read the fine print before doing anything like this! Great “heads-up” post.

  5. Anonymous says

    You can get 20% off Home depot gift cards (and may other major chains) with dealpass. Look it up on fatwallet.

  6. I found the same is true for Dell’s promotions..

  7. Sean Brandt says

    This is brilliant – and handy – we are going to do some small remodeling projects this fall…so we can start stocking up on Lowes cards now…

  8. Variable Standard APR = Prime Rate + 14.4 percentage pts. (22.4% as of 06/01/06).


    I need to find some way to get into this ‘lending to the ignorant’ game… 😉 (Yes, yes, I know, it’s disclosed in the fine print; still doesn’t make it an ethical practice.)

  9. Another item to keep in mind when doing this at Lowe’s. Do not charge other large non promotional purchases to the card until you have paid off the 0% promotional amount. The card provider will apply all payments to the non promotional amount until it is paid off. Only then will they debit payments against 0% promotion item.

    Not every department store card provider does this but I know first hand Lowe’s will. You will find this stated in the credit terms for most cards. They maintain complete control over how to apply your payment to the card. Be careful or you will be sending in a big payment to keep the back interest from messy up a good deal.

    • You are correct! They play with the payment. I have done this for 18 years for my business, never paid 1 dime interest. I have called the card company and setup how my payment is applied. I don’t use this card for 5% off. Only deferred interest. You can request they apply your complete payment to the first promotion to come do. They will do it, but change it back after about 6 months without notifying you. You have to stay on top of your invoices. You can call them as I do and complain when they change my payment but they will do it anyway. You can also pay in store, and call 2 days later and tell them how to apply the payment. Pain in the rear but a great way to pay over time for large purchases.

  10. I do shop at Home Depot a lot and use there card from time to time. What I usually do is when I know I will be making a purchse there, I willgo to Safeway and get how ever many Home Depot gift cards I need and pay for those with my Citi reward (5%) card. Then go make the purchase at Home Depot. When we have to make an expensive purchase (central A/C) I will use the Home Depot card and just pay it off with in the 12 months.

  11. I’ve done the 0% for x many months game with Sears, Home Depot, Rooms to Go and now Sleepys (bed store).

    I usually try to have it paid in full before the last statement of 0% comes out so I’m ahead of the game.

    The interesting thing about the Sleepys credit – it’s 0% for 24 months and it’s equal payments. I’ve never seen this before. They took the total, divided by 24 and that’s what my monthly payment is each month (basically, what I do but they did it for me). The payment never changes. As long as I pay on time each month (autodebit), then I’ll never be charged interest on this purchase.

  12. Bigmouth says

    Furniture stores tend to have much longer 0% APR offerings. One of the stores in my area just advertised that they have a “no interest till 2009” promotion. That’s pretty amazing.

    I haven’t done any 0% balance transfer since I don’t really need any extra cash to do anything. The whole concept of “free money” troubles me. The credit card companies do that sort of thing because they know statistically a good protion of consumers will run into various kind of financial troubles whether it’s self-imposed or caused by external reason. When such situation occur, the card owners entire savings/investing/expense structure falls apart. Then “free money” all of sudden becomes very expensive debt… The bankers aren’t stupid, they are “free” for a reason…

  13. Everything is risk v. return. The main risk on using 0% balance transfers is just spending the money. Everyone has to judge their own ability to control that. But if you just put the money into a bank account, there is no risk of actually losing the money like in other investments.

    The same avoidance argument could be applied to those free food samples at grocery stores. They know that statistically “free food” will most probably result in more purchases of that product. But I still eat the samples! 🙂

  14. Mallik Govula says

    I think there are common misconceptions about credit and how to use it. If used properly, it can be a great tool / asset. I have been burned in the past with Store Credit card and their billing cycle but I think paying a bill without interest over a period of an year yeilds maximum…er, profit?

    My approach is quite simple. When I have to make purchases, I try to consolidate it into one large purchase and use the store credit card along with the 12 month free payment option (I get coupons from lowes and Home depot quite regularly with this offer). I then come home, log on to my CC and setup an automatic payment. The first payment would reduce the amount to something that can be paid of in round figures in 10 months. So in total I only use 11 months out of the 12 given to be safe. This approach has come in quite handy and very practical. Trying to use it for the given 12 months has lead to problems in the past but 11 months works out perfect…!

  15. Thought you would be interested in this….

  16. Do you guys usually pull your credit reports? I only ask because when I was working as a loan officer I went to a credit seminar hosted by the big three and they noted that they consider those types of loan more risky since default rates are statistically higher. I don’t recall the details unfortunately, it was a while ago.

  17. Would like to probe Sean’s comment about the “unethical practice” of lending to the ignorant. Perhaps we should require an IQ Test prior to granting credit to someone? Perhaps we should only target credit offers to ZIP Codes where we think a higher percentage of intelligent people live (this is called red-lining, and is illegal). I’ve worked in Credit for quite a while and have seen many benefits, both from the consumer standpoint as well as from the large number of people employed within the industry. In all that time, I don’t ever recall being required to force someone to sign up for Credit. We live in a free society, Sean… you always have the ability to say “no”.

  18. Ryan Healey says

    I have used no interest offers from both Lowe’s and Home Depot and SAVED hundreds in interest charges I would have paid using another card or lost in interest earned on savings had I take cash on hand. It’s is very easy to keep track of then whe 12 months (or 6 month) promotional period ends and you need to be sure you can pay off the balance in that period BEFORE making the purchase. I take my total, I devide it into equal payments and then have my banks online banking software electronically pay part of the balance each month until it’s gone. That way, you don’t have to think about it at all, just enjoy borrowing THEIR money interest free!

  19. I have purchased everything with these deals that offer you no payments and no interests for a whole year. If you can not read what the offer is all about, then do not use credit. The smart person will make the purchase and will make 12 equal payments to pay off the full amount prior to the year is up and save the interests. THERE IS NO CATCH!

  20. How do you get aound paying the full amount of interest if you miscalulated the final months payment. now they are charging me the full interest . I was one month off of my final payment.

  21. We have used 0% interest offers for years. Not taking advantage of these offers is just not being very smart. Not reading the details of the arrangement is, well caveat emptor. They all work pretty much the same; make a large purchase ($1,000-$3000) and then pay it off in the TIME PERIOD in which the no interest is in effect minus one month. So if you have $1,500 charged for 12 months divide the amount by 11 months and the amount EACH and EVERY month. Why -1 month? Well, do you trust them to get your last statement to you on time? You do? Well there’s one born every minute that does… Simply put they are out to hook you and you should be out to shark them!

    First of all if you can’t do what is required then DO NOT make the purchase! The interest rates are two to three times that you could get on a traditional card. If you can not make the monthly payments then do not use this method of financing. Period. If you can make the purchase knowing you CAN and WILL make the monthly payments than it’s the ultimate legal scam you can make on a bank. You must have discipline be diligent in making the payments though.

    We have financed somewhere in the area of $10,000 using these offers and have never once paid interest. We have taken it so far as to buy a Chevy Tahoe because they offered 0% interest. Calculate 5% interest on a 60 month loan on a $50,000 SUV and what do you save?


    Now that’s what 0% interest can get you! Borrow smart, be diligent in payments and as Dire Straights sang “Get your money for nothing and your chicks for free”. Well I can only vouch for the money!

  22. What Rick said is important. We do use the 0% intrest often with great success, however my husband is in construction and we use the Lowes credit often. We realized they were putting all our payments toward things we charged after the 0% item. If we hadn’t noticed come August we would have been slammed with the acrued intrest and who knows what else even though we have been paying more than the minimum payment. When I called Lowes they said that is just the way we do it and that I was actually paying less interest on the new purchases but if the other wasn’t paid off by August we would have the huge interest charge applied to what we owe. The person I spoke with said we could have the payments applied to the original purchase. That will result in more interest since we already have been paying interest on that amount. Lesson learned if you do the 0% interest don’t charge anything else on the card.

  23. well duh is all i can say.
    of course you get charged interest from the purchase date.

    it’s so simple to just pay 1/12 of the purchase price ( if you have a year no interest ) and you pay no interest. you’ll be fine.

    if you’re in such poor financial state that you need NO PAYMENTS too. then you probably don’t’ need to buy anything in the first place.

    I’m pretty disciplines and usually pay minimum until about month 9 of 12 then pay half of what’s left in month 10 and half in 11. leaving no chance to get burned with the crazy interest they charge.

    it is hard to resist the ‘free money’ temptation.

  24. HELLO !!!!!!!!!!!
    What do you think 12 months – no interest – is all about?
    It says it in the “print”–“”YOU”” get no interest as a special only if you pay by the rules in the 12 month guidelines. HELLO !! What part of this don’t you understand!!!!!!!!!! Then your credit shows that you are smart enough to take advantage of this “DEAL” !!!

  25. Seriously… wtf is wrong with you.. everybody knows that it must be payed in the agreed upon time.. what do you think they’re just giving you a break for a year then you can take as long as you want to pay for it after that year interest free..? What is the benefit to the financer there?

  26. Bo Bob Bobson says

    Dee you atche, DUH.

    That information is CLEARLY posted in the fine print, and anyone who does not understand that is not responsible enough to own a credit card, or a $1400 fridge, for that matter.

  27. I use Care Credit quite frequently for my dental visits. 0% interest for one year. About 28% if I don’t pay it in time. I use to have to call them up every month to tell them to apply my payment to the oldest charge. They finally got wise to that, Probably lots of calls they have to deal with, Costs money. I don’t have to call anymore. It is always applied to the oldest purchase now.

  28. dustin stoll says

    this is the very simple difference between differed and delayed. all these cards are differed which means they just differ the interest to add it back. not just if you go past the rate period but if you miss or make a late payment. if it were delayed it would start anew at the end of the period. i used to work retail for more than a decade and a large chunk of it at sears, and every time someone wanted to apply a 0% offer i would make sure this was known as a good salesperson should.

  29. I just found out today that if you use the O% offer to make a purchase and also use the card towards other purchases, even if you end up paying off more than your first purchase the monies only go towards your new purchases…

  30. Or when the end of the promotional date is coming up – pay it off with another promotional free interest card. That’s what I do! They want your business!

  31. Jon Snow says

    I don’t see why you have to wait until the promo expires before you start paying. The reason for getting the 0% is for you not to pay more money than you need to. You have to divide the total $ purchased amount plus tax with the promo’s # of months…and all you have to do is pay that miminum amount gradually.

    You would need to pay monthly regardless you pay them in full by the promo’s end….so why give them more money?

  32. frances welton says

    Used my Home Depot consumer card for a few low cost items. Checked my credit score the next month and my score had gone down due to these purchases! They indicated this was the reason…beware.

  33. cheryl crum says

    Love the 0% interest rates. I do my big purchases then and immediately setup payments to finish a month or so before the “free’ time ends to make sure I don’t have to pay the interest. If it is to large, I pay final payment with a low interest rate loan from my bank. Works out great.

  34. Common sense says

    That’s why you take the total amount purchased and divide that by the amount of months offered at 0%, (minus a month due to billing cycle) and make interest free payments throughout the promotion and pay the item off. Who the f&ck uses their own cash???

    Purchase: $1,400
    0% 12 months
    $1,400 \ 11 = $127.27

  35. Home Depot policy, it sounds good, but there is a caveat in the term. See the “Minimum interest charge: $2”? That is directly from their page. Here is the advertised: No interest if paid in full within 6 months financing on purchases of $299 or more.

    If you have a $1200 item you are paying on 12 month financing, you will have paid $1224 by the end of the term. That sounds insignificant, but that last $100 payment had a $2 charge for that month. They still managed to get you for 24% interest, for that month anyway.

    *With credit approval for qualifying purchases made on The Home Depot or EXPO Design Center Consumer Credit Card. APR: 17.99% – 26.99%. Minimum interest charge: $2. See card agreement for details including APR applicable to you. Offer valid for consumer accounts in good standing; 6 months everyday credit offer is subject to change without notice.

    • The way I read the terms, the $2 minimum interest charge applies only *IF* you are charged interest at all. If you pay in full, there is no interest paid. Did you actually get charged this $2 on a something that was paid in full within the time period?

Leave a Reply to AA Cancel reply