7 Reason Why I Hate Buy Now, Pay Later Plans

I'm sure you've seen them advertised on TV or in stores – DONT PAY FOR A YEAR or NO PAYMENTS UNTIL 2010 or even longer. These deferred payment or BUY NOW, PAY LATER plans are supposed to make it easier for you shop and get the things you want without paying for anything right away. Why wait if you don't have to?

It just sounds tempting, especially when you want that new piece of furniture or new electronic or computer – no interest or payments for a year. It's great because if you don't have the money, these plans allow you to save throughout the year until you have the full amount. By the time the bill is due, you'll have enough funds put aside to pay it off. Everyone wins.

Or so it seems. I have to wonder, how many people actually do this? How many people 'forget' and by the time the bill is due, don't have the money to pay it and then it turns into a debt with interest?

It happened to a family member of mine. The purchased an entertainment unit and home theatre system for $1,000 on a don't-pay-for-a-year-plan. Well, a year passed and they didn't pay the bill. Now, almost 2 years later the bill is still outstanding for $500. The biggest surprise? The interest rate is 28%!

What's my point? If you can't afford it now, you probably won't be able to afford a year from now.

This is why I don't like these plans. And here are a few other reasons, why these things make me cringe:

1.) Depending on the plan, if you don't pay the amount in full by the due date, you could be charged all the interest that accrued during the time of the 'free period'

2.) You usually still have to pay the taxes at the beginning.

3.) The interest rate is usually high if you end up financing or miss the due date.

4.) Sometimes, there's an 'admin' charge that you pay at the beginning.

5.) Not always available on the item that you might want.

6.) There's usually a minimum that you have to spend to qualify; you end up spending more than you usually would.

7.) The buy now, pay later plans are frequently on items that are NOT on sale.

It's human nature to want something now and just not think about the repercussions.

Just bypass these plans and wait until you can afford it.

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