Savings Tip of the Day, Nov. 20, 2007

This morning one of our board members asked me to figure out how much money our members can potentially save by financing things like appliances and furniture at the credit union instead of at the store or on a credit card. Here are the results.$1,200 Fridge

To buy at 25 cubic foot refrigerator you will spend around $1250. That’s also pretty close to the cost of a really nice TV, an Apple MacBook, or a furniture suite. To borrow this amount at a typical store account rate of 21% and paying minimum payments of about $40 per month, the total interest paid would be around $575. It would take over three years. (That’s if you start making payments immediately. Sometimes stores offer ‘no payments for 6 or 12 months’. That just postpones your having to pay for it and stretches the loan out longer than it needs to be, oftentimes longer than the warranty on the item you bought.)

The same loan when made at our credit union’s average personal loan rate of 12.31% is much cheaper. At $76 per month that same amount of money would be paid off in 18 months and would only cost you $125 in interest charges. That’s an extra $350 that you’ve saved and you never missed the money because there’s the added convenience of payroll deduction payments.

In all fairness if you were to pay $82 per month on the store account you would bring your total finance charges down to $218 and pay it off in 18 months. That’s only about $100 that you missed out on saving! Then there’s the pleasure hassle of dealing with the store employees who have foreign accents and try relentlessly to sell you add-on products that you’re not interested in. With that there’s no comparison to hanging out with the nice folks down at the Piedmont CU.

So to make sure you’re getting a good deal, do a little figuring before you do any signing. Here’s a link to our calculators page which among other things can help you figure out how much you can afford before you go shopping. Speaking of shopping, the credit union will be open the day after Thanksgiving to serve you if you run across any fantastic deals.

One Response to Savings Tip of the Day, Nov. 20, 2007

  1. Great post!

    Yesterday I had coffee with Ron Bensley (Chuck Bruens guest blogger) and we were discussing this very subject. How credit unions need to educate members again.

    There’s a sense of pride when you can actually save for a big purchase like a new fridge and pay cash. And mine is giving me fits so I’m going to begin “making those payments” to myself and hopefully by the time it dies, I will have enough to buy the fancy one with the ice machine!

    Thanks for the inspiration.

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