Have you ever found that despite your best intentions, you caved and opted to use a deferred interest, buy now, pay later offer?
You are not alone.
Weirdly, I love to budget and plan our finances. But I don’t always get it right. I truly admire the people who do. Those people who never have to use a credit card again are my heroes!
Sadly, I am not one of them.
Sometimes, my safety net needs a safety net and I find myself in an unplanned financial “event”.
And that was where we found ourselves recently.
Noah, our twelve-year-old dog, came down with a horrendous cough accompanied by vomiting. After waiting it out for a couple of days, I felt (Brian did not) that he needed to be taken to the vet. (In the spirit of honesty, I have to confess that I panicked. My imagination ran amuck and I was sure there was a serious complication). The problem was the potential (high) cost of the vet visit.
While my solution wasn’t ideal, I decided to proceed by utilizing a Care Credit card on which we did not owe anything.
Depending on the balance, the Care Credit card offers an x number of months, same as cash deal. Knowing that prior to the deadline we should be able to pay it off, I made the decision to proceed.
NOTE: I am not advocating this payment method. There are many, many things that can and do go wrong when the decision is made to use no interest, same as cash deals. However, many of us do fall into the trap from time to time and choose to make use of a deferred interest offer. If that happens, there needs to be a plan in place to pay it off.
The purpose of this post is to highlight one way to ensure the debt gets paid.
After returning home, a few hundred dollars in the hole, I knew the bill would quickly follow.
However, after many years of learning through mistakes, I knew exactly how to deal with the charges.
Automatic withdrawal.
My uncle John has a great saying: “the road to hell is paved with good intentions”.
The same can be applied to serious debt.
At this point, I know myself pretty well. In the past, my good intentions would have been to pay the card off as soon as I got the bill. Or, split the bill in half and pay it in two installments. Or, any other really good, imaginary, scenario.
The reality would be that I would too often procrastinate in making the payment because I was waiting to be able to reach one of those imaginary, lofty goals.
The good intentions ended up costing me a nice little $35.00 late fee (and in some instances, it can cancel the same as cash incentive.)
Experience has taught me what to do when the bill arrives. If the time frame to pay it back is six months, I split the balance into five payments and set it up to withdraw from our checking account automatically. Taking a chance missing a payment or not paying it off during the promotional period, is not an option. If I end up having extra cash with which to pay it off early, great!
If not, I ensure that no payments or the crucial deferred interest deadline is missed.
While utilizing the same as cash option isn’t ideal, if you find yourself in a predicament you can at least take steps to ensure the bill’s timely demise.
Automatically.
The following points are very important to keep in mind if you make the choice to pay using a same as cash method.
Proceed with caution!
Do you have the ability to add the payment to your existing budget?
If you want to know how to set up a budget, check out this post
If your finances are stretched too tight to add another payment then a deferred interest option could really put you in a severe financial situation. Proceed only in extreme and rare circumstances! There has to be a plan in place that gives you the ability to pay off the debt.
What happens if you are unable to pay off the debt by the end of the promotional period?
It is a common misconception that as much principal as possible can be paid down during the promotional period and interest will be added only on the remaining balance. Not true.
If you are unable to pay the balance in full during the promotional period, the interest is retroactive to the first day of purchase. This has the potential to result in a horrendous amount of interest that you owe.
If the beginning balance is significant, you could end up owing as much interest as the original purchase price.
I personally know a couple who bought furniture this way. She said when they missed paying off the furniture by the end of the promotional period, they owed as much in interest as they had originally charged.
There is a reason that companies are willing to offer this option.
Deferred interest, 12 months same as cash, buy now, pay later deals can all be enticing. And sometimes, despite all our planning, we find ourselves using this method of payment. If you do, determine ahead of time not to to stay stuck there.
Automatic withdrawal is a preventative, little solution that has the ability to prevent a very large, future, financial problem.
Set it up and move on with peace of mind knowing that it will get paid. Automatically.
Note of interest: After a few hundred dollars, we took Noah home where he promptly threw up the medicine that he was to take. We made the decision to wait it out and see what happened. Of course, he got well, which is really a good thing. Except the part where I had to admit Brian was right ☹
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