THUMBS DOWN: Buy Now, Pay Much More Later

Physician's Money Digest, December 2005, Volume 12, Issue 16

Every bargain-hunting physician hasheard retail stores touting the amazingdeal of no interest on your paymentsfor a whole year and similar incentives.According to BankRate.com, while thismay sound like a great buy, there aresome serious caveats. If you are able topay off your purchase within a year andnot have to pay any interest, then it is agreat deal. But if you take your time tomake the payments and the interestkicks in, you may be in a bind. At thatpoint, the finance company applies theinterest retroactively effective to yourpurchase date, which can get veryexpensive. The buy now, pay later campaignis also problematic. If you're takingadvantage of such an opportunitybecause you can't afford the item rightnow, how can you be so sure you canafford it when the payments start? It'sbest to hold off the purchase until youcan save the money to buy it outright.If you can pay for the item up front,you can avoid the high interest payments,which will cost you much morein the long run.