This year, parents and students have been shelling out big bucks on school supplies. That paired with the pandemic can really take a toll on our finances. This morning, we take a closer look at an alternative to credit cards.
“Back to school and college spending expected to top more than 100 billion dollars this year, breaking all kinds of records for the priciest school year at a time when most of us really need to save every penny we possibly can because we just don’t know what’s going to happen next.”
That’s why tech-life columnist Jennifer Jolly says it’s more important than ever to avoid debt and payment traps.
“One of the biggest and most common pitfalls that we see especially around big sales holidays is retailers pairing an enticing offer like ‘no interest if paid in full’ or ‘special financing’ with a clause that allows the deal to turn really ugly really fast if you make the slightest mistake.”
One way to avoid that is by using point-of-sale financing instead of a credit card. These are basically loans. You make a set number of payments over a period of time. One company that offers this is Affirm.
“So you load up your cart, you click affirm at check out, add a few bits of information like a phone number and you get a real-time decision that does not impact your credit score. So you know upfront exactly what you’ll pay for 3 months, 6 months, 12 months it’s all up to you, and zero percent interest means zero percent interest. No tricks, no deferred interest, no catch.”
This is useful for people with fixed incomes and is good at sticking to budgets. It’s also better to use this to buy one big-ticket item, not multiple purchases.
“This all sounds very very good, is there something people need to be aware on the other side of it? The biggest con with using a service like this is — there are a lot of pros — the biggest con is: does it urge you to buy something you really can’t afford or spend money you really don’t have so as long as you have an income coming in you have a fixed income you know I can spend this amount of money every single month and be fine, be safe, then you’re fine. If this is like hey I’m going to wing and a prayer it and I’m going to go buy all this stuff I can’t pay for now or ever, then you’re going to find yourself in trouble again.”
Affirm is available at more than 6,000 online retailers like Target and Wayfair.
Another con to these services is high-interest rates. While some may offer zero interest, others can be as high as 30%. So make sure you check before you use it.