How Good are Those “Buy Now, Pay Later, No-Interest” Deals?

money

FOX 4′s financial expert Kathy Stepp tackles the question, are “buy now, pay later, no- interest” deals good ideas or just rip-offs?

A retailer offering a “buy now, pay later, no interest” deal is offering financing through a financing company. You must qualify for this financing. If you qualify, you will, in effect, be opening a charge account like a credit card. You will receive monthly statements, but they will show that only a small payment or perhaps even no payment is due until the deadline of the deal. However, the statements will show the amount of interest that may be due, which is often at laughably high rates. If you pay off the loan balance before the deadline, you won’t have to pay any interest. If you don’t, then the interest you owe is the amount of calculated interest from the beginning of the loan period!

If you shop around and find a good deal on the item you want and the retailer is offering a “pay later, no interest” deal, you should probably take it. You will then get to keep your money in the bank earning interest until the deal’s deadline. Just make sure to mark in big red letters on your calendar the due date of the money so that you won’t have to pay all that interest! And to be extra safe, make the payment in person so you don’t have to rely on the postal service.

WARNING: Don’t ever buy anything based on your hopes of getting the money to pay for it later. For example, don’t buy something now that you have to pay for later when your expected bonus is paid or you receive a cash gift for your birthday.  Something could happen to cause you not to receive the expected money, and you may owe money that you don’t have!

If you have a question for Kathy, email her at Kathy@SteppandRothwell.com.

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