Buy Now Pay Later Credit Card Promotions Profits and Pitfalls
If you shop around the holidays, chances are you’ve heard about buy now pay later offers. Many stores offer deferred interest on their credit card promotions to entice new customers. If you’re careful and you know how to budget, this can work in your favor. If you’ve never heard of a buy now pay later credit card promotion, this is for you.
We’ll walk you through what deferred interest means, benefits, and pitfalls that come with shop now pay later promotions. This way, if you choose to utilize the buy now pay later system, you’ll know exactly what you’re getting. You’ll also see why buy now pay later is much better than rent to own.
What is Deferred Interest?
Deferred interest is where a retail card lender will offer you a card that enables you to shop now pay later. You buy your items and don’t worry about paying right away. You won’t pay any additional interest charges if you pay it off by the end of the promotional period. However, if you don’t pay it off, you’ll get a retroactive interest rate added. Many people make the mistake of not knowing them when they sign up for these offers.
Buy Now Pay Later Profits
The most obvious benefit is that you can purchase things now and pay them off over a few months. This is especially nice around the holidays or if you’re planning a large purchase. You don’t have to worry about coming up with the money upfront. You can easily work your monthly payment amount out by dividing your purchase price by the number of promotional months.
As these usually come in the form of retail store cards, the stores may give you a deal. It isn’t usual for a retailer to give you a percentage off your purchase when you use store credit. This can add up to even more savings, especially if you pay it off before the promotion ends. Be sure to ask your retailer about any possible additional deals they may have when you pay with in-store credit.
Retail cards tend to have less rigid credit requirements. This means that you can use them to build your credit with responsible use. You’re more likely to secure a retail card than you will many regular credit cards. Pay your balance in full and don’t miss any payments. It reports to the credit bureaus, and this can boost your credit. Many people use the Shopping Cart Trick to acquire store credit cards easily.
When you sign up for a retail card, you’ll usually add your email to the newsletter list. This is an excellent way to learn about additional sales or promotional offers the store may have. Also, many retailers send coupon codes through email, and you’ll be able to get these as well.
It’s an excellent help in certain emergency situations. Say your refrigerator suddenly quits working. Do you have enough money to replace it right away? If you’re like the majority of people, the answer is most likely no. With buy now pay later, you can afford a new refrigerator and pay it off in convenient payments.
Buy Now Pay Later Pitfalls
One of the biggest pitfalls with buy now pay later offers is that customers don’t understand what it means. Many of these shop now pay later credit card promotions come with retroactive interest. This means that if you don’t pay off your balance by the end of the promotion, you’ll pay interest. This interest will backdate to the first month of the promotion, and you’ll get it all at once. Say you purchased a $500 item for 12 months. By the end of the promotional period, you’ve paid $498. You’ll be responsible for all of the interest payments back to the first month.
It’s also very easy to rack up an amount of unmanageable debt. Almost every big retailer has their own credit card promotion that they advertise. If you get multiple cards from multiple retailers, you can quickly dig yourself into a hole. You may not realize how deep of a hole you’re in until it’s too late.
These cards also usually come with high-interest rates around 24.8%. Depending on your credit, this could be almost double what you have with a normal credit card. If you don’t carry a balance from month to month, it won’t be a problem. However, it can stack up very quickly if you do carry a balance. So, it’s a good idea to know exactly what the interest rate is. This will help answer the question should you have a store retail credit card.
Who Should Buy Now Pay Later With Credit Card Promotions Benefits?
These offers do come with pitfalls, but as long as you know about them, they can be worth it. People who come up short over the holidays can benefit from these offers. People who want to build their credit can also benefit. The key to these offers is using them responsibly. You also want to read through everything carefully to make sure you understand what you’re getting.
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