Everyone wants to have what they want when they want it, but sadly our finances do not always allow us to buy as the whim strikes us. Perhaps the payments from our leveraged ETFs have not come through yet, or our cars need repairs this month. When this happens, it can be tempting to take advantage of store 'buy now pay later' programs, especially when you're on a time limit such as buying a gift. But you should be wary of offers like these. This article will tell you why.
Buy now pay later is a program that many retail stores have. It allows you to purchase an item, such as a new sofa for your Tip Top Loft or a housewarming gift for your girlfriend, and pay for it in a few weeks or months when you have the money. It sounds too good to be true, doesn't it? That's because it is. Stores offering this program often charge huge fees or impose outrageous amounts of interest for the privilege, making it even more expensive than carrying over a credit card balance.
Another danger of participating in a buy now pay later program is that you may forget about the part where you have to pay. Once you have the item, you may start thinking "why do I have to pay for it?" or forget that you haven't paid entirely, especially if you don't visit that store often. The money will be charged to your store account, so if you just never go back there, you won't have to pay, right? Wrong. If you don't meet their terms, the store is perfectly within its rights to remove the item forcefully from your home. They won't care if your in-laws are coming tomorrow or your aquarium fish foods are in the drawer.
The best rule to operate under when you're thinking about buying a new turret punch for your business or considering an expensive gift for a friend is: if you don't have the money, don't buy it. Responsible people will wait until their finances are in good enough shape before making any purchase. This might mean giving an IOU for a gift or not spending as much as you would like, but these are tough economic times. They will understand.
There are some situations where you may have to buy on credit. Only essentials qualify, however, such as a new transmission for your car, a fridge to replace the one that broke, or a home from Remax Vaughan. Even then, you should use your mortgage or line of credit to pay, as you will probably get a better interest rate from them than from the store.
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