This is on the individual, but many people end up using 'zero interest' programs to buy more than they need and/or can afford. If you do that, 'zero' interest is not a bargain.
If you don't get the 3% rebate for using the Apple Card, then it becomes a de facto 3% interest rate, not 0%
GeorgeB makes a big deal about interest rates relative to inflation but that's basically a moot point for this discussion. What matters is what you would have done with the money had you not plopped it all down at once to get the computer. If you would have had it in a savings account earning 1% then you are making 1% on the money. if you would have invested it in an account that got a 6% return you make 6% on the deal. If you invest in an account that ends up losing money, well, you would have been better off paying up front!
All of this becomes a confusing shell game very quickly because very few people have the discipline to simply take the extra money and invest it. What Apple and other companies depend on is the psychological attraction of 0% interest to convince people to buy when they wouldn't, to buy more than the otherwise would have, or to buy and then capture interest and penalty income when they don't pay it off in time.
"The Big Deal" (as you call it, not me) is that Apple is offering zero interest loans because the money is essentially free to them -- courtesy of U.S. government and its ZIRP. But, somebody always pays for the "free lunch". And, in this case, it's Americas savers who receive little or no interest on their savings and are forced to choose between losing money to inflation or risking their principle in risk based investments.
The intent of ZIRP is to do what this is doing: increase spending. But, someone always pays for the free lunch.
The same can be said any time interest rates on savings accounts are lower than the inflation rate - which is most often the case. 0% is a magic number that catches people's attention, but if the interest rate is 2% and the rate of inflation is 4% you're still losing 2% to inflation.
Any time you take a loan, you need to look at the cost of the loan vs the cost of not taking the loan (i.e. what your money would be doing.) the fact that an external agency (the Federal Reserve Bank) has set the rate lower than inflation plays into your calculation but is completely out of your control.
This is on the individual, but many people end up using 'zero interest' programs to buy more than they need and/or can afford. If you do that, 'zero' interest is not a bargain.
If you don't get the 3% rebate for using the Apple Card, then it becomes a de facto 3% interest rate, not 0%
GeorgeB makes a big deal about interest rates relative to inflation but that's basically a moot point for this discussion. What matters is what you would have done with the money had you not plopped it all down at once to get the computer. If you would have had it in a savings account earning 1% then you are making 1% on the money. if you would have invested it in an account that got a 6% return you make 6% on the deal. If you invest in an account that ends up losing money, well, you would have been better off paying up front!
All of this becomes a confusing shell game very quickly because very few people have the discipline to simply take the extra money and invest it. What Apple and other companies depend on is the psychological attraction of 0% interest to convince people to buy when they wouldn't, to buy more than the otherwise would have, or to buy and then capture interest and penalty income when they don't pay it off in time.
"The Big Deal" (as you call it, not me) is that Apple is offering zero interest loans because the money is essentially free to them -- courtesy of U.S. government and its ZIRP. But, somebody always pays for the "free lunch". And, in this case, it's Americas savers who receive little or no interest on their savings and are forced to choose between losing money to inflation or risking their principle in risk based investments.
The intent of ZIRP is to do what this is doing: increase spending. But, someone always pays for the free lunch.
The same can be said any time interest rates on savings accounts are lower than the inflation rate - which is most often the case. 0% is a magic number that catches people's attention, but if the interest rate is 2% and the rate of inflation is 4% you're still losing 2% to inflation.
Any time you take a loan, you need to look at the cost of the loan vs the cost of not taking the loan (i.e. what your money would be doing.) the fact that an external agency (the Federal Reserve Bank) has set the rate lower than inflation plays into your calculation but is completely out of your control.
In this case, as it has been for most of the past decade, ZIRP had impacted every facet of American -- and foreign (including China) investing: Where cash of any form earns nothing -- penalizing savers and forcing them to choose between losing money to inflation or risk losing even more on risk based investments.
Savings accounts are just ONE area that is effected by these schemes. In 2008 the scheme was looked on with skepticism and trepidation by all parties -- even those advocating for it. Now it's become normalized and an effective wealth transfer scheme.
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Any time you take a loan, you need to look at the cost of the loan vs the cost of not taking the loan (i.e. what your money would be doing.) the fact that an external agency (the Federal Reserve Bank) has set the rate lower than inflation plays into your calculation but is completely out of your control.