Part 17 (1/2)

One of the few occasions when checks are more convenient than other pay another individual and don't want to use cash-if you're paying back your sister for splitting the cost of dad's birthday gift, for exa a check in your ain, a thief only needs to pluck it out of the box

QUICK TIP

Check washi+ng is a scam in which a thief steals a check and chemically erases-or washes-the payee and amount, fills in new payment information for himself, and cleans out your bank account You can avoid check washi+ng by using special pens, such as the Uni-ball 207 gel pen, which retails for about 2 Its ink cannot be chemically erased

Layaway and No-No-No Sales

The hallmark of a bad way to pay is one that allows or entices you to buy stuff you cannot afford By ”afford,” Iis crucial The right way is: money first, then buy That's as opposed to the typical way: Buy first, and then figure out how to pay later

That's the biggest reason to avoid layaway and sales featuring ”no down payment, no interest, no payical and unnecessary

Layaway is when you select items you want to buy, take them to a special layaway department, and place a down payment on the purchases, usually with an additional service fee of 5 or 10 You leave items at the retailer and periodically return to make payments on the items When they're paid off, you take them home

Soment of customers were furious at Wal-Mart in 2006, when it discontinued its layaway prograet ite in a sale price that won't be available later when you have the cash A potential third reason coifts from nosy children You can leave them in the layaway department at a store rather than risk discovery in your ho the worst of purchasing scenarios-the retailer has yourIf you fail to finish oods and you often incur an additional fee

A predo layaway lovers is that it's a better idea than paying by credit card and incurring interest charges But that's based on a false pre thepayments on your layaway merchandise, what if you shoved cash for those payments under a mattress or into a cookie jar? The outcome would be the sah et the merchandise just as quickly-and you avoid the layaway fee If you have the discipline to use layaway, you should certainly have the discipline to stash away some cash, which takes less effort

And in so on a credit card Iine you pay a 5 fee for a 30-day layaway on a 100 purchase If you instead used a credit card with an annual interest rate of 18 percent, it would charge 15 percent for that same 30-day period, or 150 In that scenario, layaway costs three times more

No-no-no sales Take a hint from the name, and consider these a no-no ”No down payment, no interest, no payotcha In so a pay the balance by the end of the proed exorbitant interest from the date of purchase In addition, e card, which is likely to lower your credit score, at least teent and savvy consu bank interest on their money for the duration of the no-payments period But why? The interest you'll earn is miniscule and the penalty for a minor mistake is harsh

Don't outfox yourself When you buy so, pay for it

Credit Cards

”Guns don't kill people, people kill people, and un”

-Coun It's not the tool that ood or bad It's the user That's why credit cards, as a payment method, deserve their own section in this book They can be a convenient and even lucrative forood and evil

Maybe the single-biggest advantage to credit cards is being able to use so the card Think about it When paying with cash, checks, and debit cards, you're putting your money at risk in the transaction With credit cards, you put the bank's e and the bank has to fight with the vendor Meanwhile, you don't pay If a card is stolen, you just report it Your cash is not vulnerable

Used well, the credit card is the only form of payment that builds your credit history so you can obtain lower rates on other products such as auto loans and insurance Credit cards also provide rewards, such as cash, airline miles, or merchandise points Some offer extended warranties on products purchased with the card and other perks that vary agest downsides of any payment method Nae purchases, as we said previously, and es that sometimes top 30 percent Late-payment and over-the-lies, if they apply to you, dwarf any advantages of credit cards

If you are philosophically opposed to credit cards, I have no proble some convenience, consumer protections, and rewards that credit cards provide But if you spend less as a result of using cash only, you could be adequately coet the most out of your credit cards

Credit Cards, 1-2-3

1 Never carry a balance

2 Know your perks

3 Maintain your card

1 Never Carry a Balance

Never is a strong word But carrying balances on credit cards from month tostrong language

For those who carry a credit card balance froht evil Interest rates can easily top 20 percent and push toward 30 percent, which is outrageous You could be in bigonly the ure 64

FIGURE 64 Minimum payment predicament What if you made only the minimum payment of 200 on a balance of 8,000?

Credit card balance: 8,000 Interest rate: 18 Minimum payment: 200 Years to pay off: 30 Interest paid: 11,615