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Anybody else notice all of the ads for layaway lately? Back in the olden days (AKA the 80s) when I was a kid, layaway was hot. I remember going into department stores with my parents so they could make payments on our next couch or stereo. The good thing about layaway is that it’s another way to pay for something you want in chunks you can afford (although saving up for the item yourself is even better). Another payment plan that seems to be popping up a lot with the holidays around the corner is interest-free financing. Like any payment option, it has some benefits and drawbacks. Here are a few things to watch for:

  • Spending more than you would otherwise. Is the purchase really worth the cost to you, or has the interest-free offer gotten you carried away? It’s also a good idea to keep an eye out for offers that come with a high minimum (“Spend $2,000 or more and get interest-free financing for a year!”), which may just be there to convince you to spend more.
  • Not paying it off during the interest-free period. After the interest-free period ends, the regular APR kicks in—and it can be high. That’s why it’s smart to only buy the item if you know you’ll be able to pay it off before the period ends. Ask yourself: Is this the best option? What’s the APR and how long will it really take me to pay off the balance?
  • When the monthly payments over the period don’t equal the amount owed. It’s important to do the math: based on the agreed-upon monthly payments, will you have paid off the purchase by the time the promo period ends?

The mattress, sofa or designer coat may have caught your eye and gotten you tempted. Just ask yourself, is it really worth the cost and time to pay it off, and what does the fine print say? Remember, there’s nothing wrong with taking the old-school route and setting aside some dough to make the purchase in full (in which case this Saving for a Goal calculator can help).

And for more What’s My Score blog posts on deals, discounts and smart shopping, click here.

by Variny Paladino

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