That seems like a lousy deal to me. $1299 at CC with no interest for one year or $1129 at
Amazon. That's a 15% price premium to avoid making payments or paying interest. Let's take two scenarios and compare them:
Person A has $1299 in the bank. They use $1129 to buy the camera, leaving them with $170 in the bank. They earn 10% after taxes on their money (a pretty optimistic assumption). At the end of the year, they have the camera and $187.
Person B also has $1299 in the bank. They buy the camera at CC. They keep their $1299 all year and earn 10% on their savings. At the end of the year, they pay $1299 to CC. Now, they also have the camera, but they only have the $129.90 that they earned in interest. In other words, they lost almost $60 compared to the person shopping at Amazon.
The only way the CC deal makes sense is if you are earning 15% or more on your money after taxes or if your cost of borrowing is over 15%. I know of no one who reliably earns 15% on their money. If you are paying 15% to borrow money, you need to forget about buying cameras and focus on getting better credit terms or paying off your debts. At 15% interest, even small debts will slowly crush you.
[PREACH]
The best financial advice I ever got was from a friend's dad about 30 years ago. He drew a graph comparing two hypothetical people. One person saved $100 every month. The other person borrowed $100 every month. The difference is only $200 every month, a significant, but not huge amount. Let's assume that the saver earns 7% interest and the borrow pays 7% interest.
After 1 year, the saver has saved $1,200 but with interest they now have $1,240. The borrower has spent an extra $1,200 but with interest they owe $1,240. After 10 years, the saver has saved $12,000 but with interest they have $17,300. The borrower has spent $12,000 but owes $17,300. After 40 years, the saver has saved a total of $48,000 but with interest they now have $262,000. The borrower is in the opposite situation. They have borrowed $48,000 and owe $262,000. So a $200 difference in spending each month has resulted in more than a $500,000 difference in net worth by the time the person retires.
Compound interest curves work for you or against you depending on whether you are a borrower or a saver. Almost everyone gets to choose which they are going to be. Choose carefully because small differences grow.
[/PREACH]
Still, a well laid out argument to remind me why I intended to wait until I could pay cash for one next year anyway.
