The ad screams: BUY NOW AND PAY NOTHING UNTIL NEXT YEAR! NO INTEREST! Such promotional...

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Accounting

The ad screams: BUY NOW AND PAY NOTHING UNTIL NEXT YEAR! NO INTEREST! Such promotional campaigns have appeared with increasing frequency in recent years often offered by companies such as Best Buy and Baileys Furniture. They may offer 6 months or more of interest-free loans. For purchases made in November or December, they may offer 14 months with no payments or interest, thus permitting purchasers to defer any cash outlays until early next year. However, if full payment is not made by the specified date, interest is typically due from the original date of purchase, often at 18 to 24 percent.

Best Buy has a fiscal year ending at the end of February. Why would Best Buy be unlikely to make this type of offer near its year-end?

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