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Paying a bill late can void interest-free financing
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Interest-free financing can make it easier to buy now and pay later. But you have to understand the offers to avoid costly miscalculations.Consider what happened to a New York woman who received a surprise bill for nearly $400 on furniture she purchased in Nov, 2007. She made the purchase from a store running a 12-month interest-free promotion.
"We divided our monthly payments to pay the entire amount by Nov. 2008 to avoid finance charges," she explained. She received a bill for what she expected to be the final installment on the purchase in early November.
"I mailed the payment promptly," she said.
However, in early December, she got another bill for $388--or 24% finance charges from the date of her purchase. The company imposed finance charges because she made her final payment 10 days after the one-year anniversary date of her purchase.
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"I explained I only received the November bill after the expiration date," she said. But the company said she failed to follow the terms of the offer. "Is this legal?" she asked.
A purchase is only interest-free if you pay it in full within the promotional period. That can vary from as little as three months to more than one year. But the free-interest period usually starts on the date of purchase, not the date the purchase first appears on your credit card statement.
So if the interest-free financing is for one year, the credit company has to receive full payment before the end of the promotional period, without regard to the dates of your billing statements.
For more info: Just Ask Asa!
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