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The Deferred Payment Scam
By John Watson

One of the biggest problems facing individuals today is being able to control their personal finances. The rate of inflation has leveled off, but individual indebtedness seems to be going through the ceiling with a record number of bankruptcies being filed each year.

With more people working and earning more than ever before, this just doesn't make sense. With all the ads on TV, the radio and in the newspaper selling everything from home furnishings and electronics to cars with little or no down payment and small monthly payments, it is easy to get caught in the credit trap.

The companies and the advertising execs know this, and that is why they keep those ads on TV, the radio and in the newspapers. Just looking for another sucker.

Most of the ads are honest and informative, but some are a little on the shady side. You have to check the small print at the bottom of the ad to see what they are really doing to you.

One of the biggest gimmicks, or rip-offs, now is the stores, especially electronics and home furnishings, advertising buy with no down payment and no payments or interest for one year. WATCH OUT! Read the fine print!

All of the ones I have checked state that if the full amount is not paid in that time period, interest will be added from purchase date. Some that I have checked have interest rates as high as 22% to 24%.When you start making payments you are already a year behind in interest payments. With the extra interest added each month, it could take six months or longer just to get paid down to the original purchase price.

You can, however, make this work to your advantage. Whenever you make your purchase, take the number of months until the due date, the date your first payment is due, and divide that into the purchase price. This will give you the amount you will need to put back each month so that you can pay the note off by the due date, and not have to pay any interest.

If you put this amount in a savings account each month you should earn enough interest for a dinner on the town.

So you are one of the lucky ones that has the money to pay cash. Well, go ahead and buy on the deferred payment plan, keep your money in the savings and pay when due. That way you are earning interest and not the store.

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John writes a weekly column for his hometown newspaper. You may read some of his stories at: You may contact John direct at:

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