Five Holiday Deal "Gotcha's"

Here are common holiday "deals" that look good on the surface -- but are financial time bombs waiting to go off. Thanks to USAA financial services for bringing them to my attention. I share them with you:

1) "90-days same as cash." Don't pay it in time and you could be hit with accumulated finance charges and double-digit interest rates. Now it's no longer such a good deal.

2) "5 years interest free." Don't believe it. They cannot stay in business if they don't put interest somewhere in the charge to pay for their own loans. The charge is probably hidden in the price. Or maybe enough borrowers fail to meet the terms and get hit with suspended accumulated interest to make the business practice a money-maker.

3) "Skip a payment." There's no free lunch (if I may coin a phrase). The interest may be folded into principal increasing the cost of your financing. They are not doing you favors.

4) "20% discount for opening a store credit card." Credit scores also take into account the amount of credit lines you have, as well as the frequency and recency of credit applications. You may be dinging your credit to save a few dollars. By the way, for many companies, the real money is in the financing, NOT the goods they selling. I remember the harangue I got from a dealer once for buying a car with cash and another time from a Dell salesman when I bought a set of office computers. That was instructive. (Undoubtedly the sales persons got bonuses for financed purchases.)

I would add a fifth "no no":

5) "Interest-free balance transfers." Read the fine print and understand the transaction. Many such offers say that you can transfer interest free for a period to time but charge you a one-time transfer fee. For example, a transfer that is "interest-free" for 9 months with a one-time transfer fee of 6% is effectively 8% per annum interest. Watch out.