are interest-free installments really interest-free
Interest-free means the installments add up to the list price. But if the store accepts a lower price for cash, that lower price is the product's real price, and the difference to the installment price is a cost for anyone who uses installments. The cash discount is the clue: it shows the rate the store charges.
Above what poupança earns (0.5% a month): if the money were there, the discount would be worth taking.
A 10% discount over 12 installments hides a higher rate than 5% over 10.
Small discounts over few installments still reveal a rate close to 1% a month.
Compare the cash price with the cost of the installments in today's money. To do that, work out how much would have to be invested today to pay each installment on its date, considering the yield and income tax. If that total is below the cash price, installments win; if it is above, cash wins. The Worth it mode does this and shows the difference in reais.
It is not a lie, but the real price is the cash one. The installment price charges the difference as a financing cost, which the calculator turns into a monthly rate.
With the net yield of wherever the money would be kept, such as poupança (0.5% a month while the Selic is above 8.5% a year), CDB, Treasury bonds or an interest-bearing account. If the revealed rate is above the yield, the cash discount is worth taking.
With merchant interest-free card installments, usually not. What matters is the risk of spending the money you would have kept saved, the use of your credit limit and the statement date, which can push the first installment past 30 days. Adjust the first-installment timing in the tool.
Enter the cash price and the installments: the tool finds the interest rate the plan hides.
That is 23.46% per year (effective rate, compounded).
Each month the plan charges 1.772% on the balance you still owe (first installment in 30 days). In total you pay R$100.00 more than the cash price.
This monthly rate is about 1.6 times the reference monthly Selic rate.
If the first installment were paid upfront, the hidden rate would be 2.184% per month (29.60% per year).
This is the rate hidden in the price difference and the dates. The CET (Total Effective Cost) of a loan also adds fees, insurance and taxes, which are not included here. If any apply, the real cost is higher.
Educational tool, not financial advice. It ignores fees, insurance, risk and your personal situation. Calculated in your browser.