I am a new international student in the US. In our country we didn't have credit cards like in the US and this is a new system to me.
If I get a new credit card in the US with a $2000 credit line/limit and want to buy something whose price is $1000, and I want to do the payment like $100 per month for 10 months (with no extra interest), how can I do it? What is the procedure and the mechanism?
This is possible in some situations, but it's also difficult and risky. I personally have purchased computers, a bicycle, and many musical instruments and accessories using "interest-free" or "0%" financing. Here's how it works:
So, in order to do this, the retailer has to offer the interest free financing and you have to qualify for and obtain their special credit card. Retailers and banks only benefit from this arrangement when purchases are fairly expensive, so you normally can only find these offers at retailers that specialize in expensive products that are hobby or luxury goods. You may also find such deals at furniture or mattress stores and high-end electronics stores.
Once you've purchased an item like this, you want to make very sure you pay according to the terms. On the store cards I have used, the interest rate for purchases that are not paid off during the promotional period has generally been 22.50% (APR). That is a brutally high interest rate. Compounding the risk is that the terms I have purchased under are such that if you don't pay off the balance in time, then all of the interest that would have accrued over the finance term is immediately applied to the balance, retroactively. So it's a big risk to take unless you are certain you can pay off the balance. Generally the only way to be that certain is to actually have that money in savings, in which case there isn't as much benefit to buying with no interest.
Also you'd want to pay careful attention to the difference between "24 months, no interest" and "24 equal payments, no interest". In the first case you can carry the full balance for 23 months and then pay off the total at the very end and be charged no interest. In the second case you must pay at least 1/24 of the total every month. If you miss a single month, you will be charged the full back interest and interest will start accruing going forward.
Some examples of retailers with interest-free financing:
Apple: https://www.apple.com/apple-card/monthly-installments/
Sweetwater: https://www.sweetwater.com/financing/
1-800 Mattress: https://www.1800mattress.com/convenient-financing-options.html
Bikes Online (and any place that allows PayPal Credit Buy Now, Pay Later): https://www.bikesonline.com/buy-now-pay-later-paypal/
And there are many others.
Trying to frame my advice in a way that technically answers the question:
Don't buy it right away. Pay $100/month to a savings account, and after ten months, buy the item with your accumulated $1000.
This doesn't work if you need the item now, but with some advance planning you can usually identify ahead of time what items you will need in the future.
I am a new international student in the US
Aren't you here on an F-2 visa?
that it's price is $1000, and I want to do the payment like $100 per month for 10 months (with no extra interest), how can I do it?
You can't, because there's a cost to borrow money. (EDIT: 0% special offers are -- in my experience -- only offered to people with existing good credit.)
However, there are alternatives for some purchases: some stores offer "XX days (or months) same as cash". That's usually only offered on expensive items at certain stores, and only for creditworthy customers. Or they jack up the price, to make up for the lost interest.
When you use a credit card and pay over time, you will pay plenty of interest. 16% to 20% a year is not unusual. So the wrong way to do things: Buy a $1,000 item with your credit card. Pay $100 every month. (Because interest will add up very very quickly). A better way to do things: Buy a $1,000 item with your credit card. Reduce your spending as much as possible so you can pay back as much as possible every month, like $350 a month for three months. In this example, this will save you about $100.
A better way is to get money at a lower rate, for example a bank loan. This will be harder to get, but much cheaper. A bank loan will almost always be the best you can get.
Or buy things that come with a low cost or interest free loan. But be careful: One shop might offer something for $1,000 with an interest free loan, while another shop charges $900 for the exact same product without an interest free loan.
And don't believe any salesman. Or saleswoman. Or salesperson. They only want your best - and your best is your money.
As a general rule you will pay interest if you pay your balance on a credit card over time. The credit card company is providing a service (loaning you money), and that service costs money.
That said, you can often find credit card offers that give you a promotional rate of 0% for some fixed amount of time when you first sign up. I suppose you could keep signing up for new cards and transferring your balance to avoid paying interest.
Another option is that for expensive purchases, many stores will offer a no-interest payment plan to entice you to make a purchase. Be aware, however, that they often start accruing interest after a certain amount of time if you don't pay off the balance in full.
You won't be able to do this with a credit card, as their entire business is built around buy-now, pay-more-later. It may be more difficult to find, but some stores offer Layaway, where you pick out an item, and the store holds it for you until you make the last payment. You don't get it until you've paid in full, but in many cases, the store doesn't charge interest.
Be careful with the layaway fine print
Many stores will charge a small fee to open a layaway account. You'll have to bring 10%-15% up front. You also will pay weekly, not monthly, and the most generous term will be 90 days. If you end up not paying they will keep at least some of your payments, usually as a restocking fee. You also generally won't be able to get hot-ticket items this way as the store can easily find someone with cash-in-hand. And some stores charge some interest as they are essentially extending you credit and holding product for you.
The best way to buy is always cash in hand.
Public Service Announcement about college and credit cards
Credit card companies target college students. They know they'll run it up, and either spend years making the minimum payments, or mom and dad will pay it off.
If you have no credit, go to a bank and get a secured card for $1000. A secured card is a credit card where you open an account with the spending limit. If you can't pay, then the credit union will just use that account. Don't carry it with you and make a few purchases a year on it and pay it off immediately.
Simply put, you (specifically you) are extremely unlikely to just get a free loan especially as an international student. I would be amazed if you could qualify for a credit card at all.
Anyways, if you did qualify for a credit card then it would likely be for 25% APR.
Charging $1,000 to this credit card will cost you:
or
It's simple, paying off the loan faster results in less interest paid.
In the UK, at least, there are quite a few credit providers who operate "buy now, pay later" schemes. Perhaps the most well-known of these is Klarna, which does also operate in the US. Beware, though: if you fail to make your repayments on time, you will be hit with extremely high interest.
Some of these schemes have come under scrutiny recently because many merchants offer them as quick checkout options, allowing customers to easily take out such lines of credit without being fully aware of the terms they're agreeing to.
Every answer so far assumes you're financially illiterate and have no self control or planning ability. While I typically agree with the warnings provided, credit card offers and rewards can be valuable to take advantage of if you're very careful, plan accordingly, and have a high attention to detail. Personally I've received thousands of dollars in bonuses and rewards "playing the system". If you ask me to compare it to my time spent - I could probably pick up a second job and do just as well, but I enjoy this more.
Now, typically, if you were to purchase a $1,000 on an average credit card in the US, and aim to pay $100/month, you'd actually be paying for 11 months, with an 89.11 bill on the last. That's your total interest. With that in mind, you may want to look here if you do need to plan purchasing with credit.
With the above in mind, your goal of buying something for $1,000 and paying it off in 10 months is very doable. Be warned of getting into the wrong mindset, or falling into a pattern of purchasing on credit without paying in full monthly... but a quick google search for "0% APR credit card no prior credit" gives plenty of options. These will be the gimmick-iest and most predatory offers though. Once again, see the wealth of valuable information already provided here. But if you're really looking to, have the time to actually read all the terms and conditions, and are careful throughout the process (setting reminders for payment dates or other needed actions) you absolutely can do this with (imo) a reasonable amount of effort. This is where your attention to detail is key.
I'd pay into a fund like the top answer suggests if I were you, for now, assuming its an option. Just wanted to add some more detail/resources.
P.S. I only didn't link to real offers as I don't think that's allowed in the SE - and like I said, in your situation, I wouldn't. I built my credit for 5+ years before "playing the system" and benefitting from promotions, rewards, or deferred/0 interest.
If I get a new credit card in the US with a $2000 credit line/limit and want to buy something whose price is $1000, and I want to do the payment like $100 per month for 10 months (with no extra interest), how can I do it? What is the procedure and the mechanism?
You just charge it to the card.
The interest is just a matter of perception. Think of the REAL price as the price with interest (e.g. $1100). Do you want to buy that thing for $1100? If so, put it on the card and pay $110 for 10 months.
If you are saying "how do I get it without paying interest", that is just money-grubbing, trying to get something for nothing. That line of thinking is the real danger to you. Because your quest for that "free lunch" will lead you into a ton of very bad deals from predators trying to take advantage of the stupid. There is no free lunch. If you don't want to pay interest, then save $100 for 10 months and buy it at the end of the 10 months.
From a comment:
Also: DON'T! It's a trap to get you hooked in an endless cycle of debt, consumerism and paycheck to paycheck living
Debt slavery. Granted it's not as bad as the real slavery found in the third world, but it feels as bad to the victims.
But that's only a problem for those with poor needs control. If you gotta have it and you're willing to do a deal with the devil, then you're a debt-slave, but you do have that shiny gadget. Oh wait, it was a cheap Chinese piece-o'junk, and it already broke.
The worst of this is with cars and cell phones, when they will happily sell you a new car even though your existing car is "upside down" (owing more on the car than it's worth), and will simply fold that debt into the new loan/lease. Since the financially uneducated usually don't allow themselves ANY spare money to buy out of that hole, their only exit path becomes signing loans on bigger and bigger new cars, with bigger and bigger monthly payments. Eventually the house of cars comes tumbling down, and they wind up bankrupt, and there are people who will finance cars for the bankrupt on even worse terms.
