The Never... Never Plan 

Many stores offer the "buy now, don’t pay until next year" programs.

If you cannot afford the item today what makes you think that you will be able to afford it in the future, ask yourself.

What is going to change financially so that I will be able to afford to purchase this item? Where will the money come from?

At this time of year the never never purchase plan seems to appeal to many consumers – consumers that perhaps do not understand the full impact of these plans. If you are considering a buy now, pay later purchase read on, this is for you.

Consumers looking for big-ticket items are being bombarded with all sorts of deals designed to provide instant gratification without the pain of forking over their hard earned dollars for months or even years to come. The lure – Buy Now! Pay Later! FREE, no costs plans or are they?

Free money – Marketing at its best

Deferred payment plans are everywhere these days – partly because of low interest rates and the fear that consumers might stop spending. Ever wonder how these programs work. Are they really free money no interest? Not a chance! However, for some consumers that pay their bills in full when they are due, it is possible to get a bargain – if you negotiate a discount on your purchase price before you buy. While the offer may be enticing be forewarned that you could get caught up in the hype of the season and the marketing pitch. So you could end up paying high interest if you don’t pay the balance in full on the exact due date. Some retail stores require the consumer to place the purchase on the retailers’ credit card – many of these credit cards charge interest rates of 28.8% per year. As many as 46% of credit card users do not pay their credit card balances in full at the end of each month – with the result that these stores are making very large sums of money in interest charges by lending consumers the money to make the purchase.

Buyer beware

Some of these retailers sell the loans to finance companies and many consumers find themselves dealing with a finance company that under any other circumstances they would never have considered borrowing money from. So be aware of what you are signing, read the agreement and ask questions.

Fees

Don’t think that you are going to walk out of the store without paying a red cent. You can expect to pay at the very least a fee ranging from $35.00 at the Bay to $49.95 at the Brick for the privilege of buying now and paying later. Add to that another 14.50 % to cover the taxes on the purchase price. The taxman does not defer the taxes, although some companies advertise that they will pay the taxes for the consumer.

Again read the fine print, ask questions, make sure your answer is in writing.

Payment due dates

Deferred payment dates can range from six months to two years. Watch the payment date, some of these programs have a clause that states if you do not pay on time the full balance, the interest charge runs from the date of the purchase at 28.8% not the date the payment was due. So you could end up paying interest charges from the date you purchased the item.

If you buy now and pay later you are assuming that you will still be employed in a year or two and that if you cannot afford the item today something will change so that in two years you will be able to afford it. What if nothing changes and you can’t afford it. Now it will cost you a great deal more that you ever thought possible.

Save your money

If you are considering making a big-ticket purchase and can not afford to pay cash for it ,visit your bank and ask for a line of credit the interest rate is guaranteed to be lower than you will pay if you get involved in a buy now pay later plan. Nothing in this life is free especially credit, don’t take on more debt this season than you can afford. 

A fond memory will last forever – do something kind for someone else this season. Give a gift from your heart not your credit card.