Busted! It’s the roof, furnace or washing machine and there’s no spare dough. These are expenditures you don’t want to put off — picture two working parents schlepping clothes to the laundromat for a couple of toddlers. Not fun.
Fortunately, there are always tempting Buy Now Pay Later offers to help you out.
They work if you set aside enough money to pay them off in full on the due date. One strategy is to settle the balance with a loyalty points credit card then eliminate that balance with money saved up.
However, check the fine print where payment landmines might be lurking. Some stores, the Brick for example, funnel Buy Now Pay Later purchases through their own cards. The purchase contract is actually a retail credit card application. And you can’t pay the balance with another credit card.
If you don’t have the money in hand at the due date you are looking at close to 30 per cent in interest.
Worse, you also might be liable for all the accumulated interest from the day of purchase. Ouch.
For example, if you buy an item for $1,000 the first month’s interest is $24.91 at 29.99 per cent. The next month you’ll pay interest on $1,024.91 and so on.
Additionally, many retailers charge administration fees ranging from $25 to $50 and you may have to pay sales tax up front.
So ask the questions. What are the fees and taxes up front? Am I applying for a store credit card? If so, what credit limit will be assigned? (This is important if your credit score is marginal).
What’s the interest rate? Can I pay the balance with a credit card? If I don’t pay in full am I liable for interest from the day of purchase?
If you know you can’t save enough to pay the balance before ante up time, apply for a lower interest bank credit line. It’s still a debt but at least the interest won’t sting as much.
Clarification: In my August 4 column about retail credit cards and Buy Now Pay Later purchases, the proximity of two paragraphs made it seem that The Brick charges accumulated interest if full payment is not made on the expiry of the interest and payment-free period. This is the case with some retailers but not The Brick. We apologize for any misunderstanding about The Brick’s policies that may have occurred.
