Monday’s tip from Money Mom: “No payments until 2009” may cost more than you think! Posted by Gail H at 12/17/07 11:36 AM

Consumers Union’s Money Mom says: “buy now, pay later” is an invitation to financial trouble.

Some “pay later” programs only delay the payments, not the interest. Under many “no payments” programs, the fine print says that you get a time of “no interest” only if you pay the full purchase price by the end of the no payments period. If you don’t have the money now to pay cash upfront, chances are you won’t have it at the end of the deferral period either. If you need to make monthly payments when the “no payments” time is up, you may owe interest going back to the date of the initial purchase. You can also be socked with interest starting from the purchase date if your account is not “current” – for example, you have charged other items with the seller and you forget to mail your payment on time, or you mail it on time, but it doesn’t arrive on time.

Starting in the New Year, Money Mom will offer family finance tips every Monday here at the Daily Dollar blog: http://www.consumersunion.org/blogs/fpn

comments (1)

1 Posted by Georgia at 01/11/08 05:46 AM

I always take advantage of the buy now and use someone else's money free until 2009 or whenever. Even though I am not required to make monthly payments/interest, I will take the full purchase amount, divide it by the number of "free" months I have and make those payments. No surprises waiting for me at the end of the deferred time. Another thing I sometimes do, if I'm not required to make a payment, is again take the monthly payments and put them in an account. I not only have the funds to pay the account in full on time, I have also racked up a little interest. I'm currently doing this with a cruise vacation I purchased in Sep07 for a cruise in Oct08...full payment is not due until Jul08...I am making payments to myself in a savings account - then I will give them my money in Jul.