Guest Author - Cate Brizzell

Chances are you've seen the advertisements for "no payments until..." offers, usually for large-ticket items such as appliances or furniture.

Have you ever taken advantage of a "no payment" offer, only to find you ended up paying a lot of interest and more than you expected for the item many months later?

It doesn't have to happen. If you're smart, you can take advantage of "no payments" and purchase your large-ticket items on credit virtually interest-free.

Here's how it works.

When you purchase the item using a "no payment" offer, you basically apply for a store credit card. The store agrees to lend you the purchase price of the item interest-free for a certain time period, say 12 months. You agree to pay the purchase price, in full, at the end of the 12 months. If you cannot pay in full, you'll be charged all 12 months of interest, in addition to your remaining balance.

The store is banking on the fact that you'll enjoy your purchase, payment and interest-free. As the months go by, you'll forget not only how much you owe, but when you owe it, and when the magic date appears, poof! They've just made a ton of money off you.

Now that you know what the store is banking on when they make "no payment" offers, it's easy to turn the tables. First, record the date your payment is due, however far away it is. Move it up a couple weeks, just to be safe.

Next, determine the number of paydays you'll enjoy between now and when the full purchase price is due. Divide the purchase price by the number of pay periods. Set this amount aside each payday in an interest-bearing account, or make a payment in that amount on your new store credit card. This will ensure you either pay off the item or have enough cash on hand to make a lump-sum payment just before payment is due.

One important point: if you haven't paid the entire purchase price before it was due, you will be charged the full period of interest. In other words, if you've been making payday payments but are still $2 short of the total purchase points, you'll lose out. So you must be careful and guarantee you've paid off the balance several days before the end of the no-payment period.

I recently purchased a laptop computer using an 18-month no-payment offer. Each month I made a $75 payment to the credit card. (You should check to make sure there's no penalty for pre-payment before doing this. Usually there isn't.) A month before the entire payment was due, I made a final lump-sum payment reducing the balance to zero. I was never charged interest, and I was able to purchase my laptop with an 18-month interest-free loan!

We buy almost all of our appliances, home maintenance items and furniture this way. Even if we have the cash on hand, we take advantage of the no-payment offers to keep our money in interest-bearing accounts.

Be a smart consumer and use store gimmicks to put money in your pocket, not the other way around!