Posts Tagged ‘no-interest’
No payment – No interest! No impulse!?!
Isn’t it wonderful? There is absolutely no reason to wait for something you can’t afford now. And the deal is much better than buying it on regular credit that has to be paid starting next month. Ah! what a wonderful consumer-driven world we live in.
It’s also dangerous. In fact, it’s a trap – a credit trap. The objective is to have you commit future income towards the purchase of something you just can’t (don’t want to) wait for. We are such an impatient society aren’t we? Wait! It gets better – you are further tempted (expected) to spend more than you normally would on the item(s) AND the gamble is that you won’t pay it off completely by the time it comes due.
I have to admit, I’ve been on the no-payment-no-interest (npni) income tax cycle for about three years. What do I mean? It’s simple – buy on a npni deal, payments are deferred for 12, 15 (or even more) months. Your plan is brilliant – when your tax refund comes in you pay it off – in full.
I had a close call a couple of years ago. My income tax refund almost did not come through in time. Whew! Side-stepped that one. Why am I sharing this you ask? Because, I’m human, I make mistakes. The key is to learn from them. I have discovered that there are some key rules to a successful npni endeavor.
I think credit should come with the above warning. We tend to be overly-optimistic when it comes to using credit. The warning signs are easy to recognize.
- we can afford that loan because I’m getting a raise
- let’s take advantage of that great no-payment-no-interest deal and use our income tax refund to pay it off
- I will buy that living room set on credit and cut back for the next six months and pay it off
The justifications may differ but the results are often the same. Great Intentions lead to less than great outcomes.
- the raise didn’t come through. Worse yet, you were laid off
- your tax refund was half of what you expected
- cutting back was impossible! There was a wedding, the car broke down, etc. Etc.
The diagnosis! – don’t plan future credit commitments on possibilities. Pop a patience pill and make the purchase when the money comes in.