Any reason not to take advantage of extended pay plan?

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Itogliano
Posts: 262
Joined: Thu Jan 06, 2022 2:48 pm

Any reason not to take advantage of extended pay plan?

Post by Itogliano »

I will be travelling to India for a close friend's wedding in a few months and just booked my flights which came out to ~$2700 round trip. While I can, and was originally planning to, pay for it in full, it would take a good chunk from my savings which I would have to replenish over a few months. Noticed today through my banking app that these charges are available for ExtendPay (US Bank) with a limited offer of having no interest or added monthly fee through the end of the year. So is there any reason why I shouldn't take advantage of this? Is there any thought as to why chunking savings and replenishing over time might be better than paying the bank at 0% over time?
Makefile
Posts: 2932
Joined: Fri Apr 22, 2016 11:03 pm

Re: Any reason not to take advantage of extended pay plan?

Post by Makefile »

I have had several credit cards offer something like this. The only time it has truly had no interest and no fee was once with American Express, when you could multiply the proposed monthly payment by the number of months and it would match the original amount to put on the plan.

When these plans do have a "monthly fee" I do not know how the credit card companies are able to do this and claim that there is no interest. You would think Truth in Lending or other laws would require them to compare the series of payments with the amount financed and convert that to APR; whether the bank wants to call it "interest" or a "fee" is a distinction without a difference.
hedge_hog88
Posts: 67
Joined: Sat May 25, 2024 10:36 pm

Re: Any reason not to take advantage of extended pay plan?

Post by hedge_hog88 »

This was discussed recently.

viewtopic.php?p=7738538#p7738538

The average BH is probably not their key target demo, so i was going to say "go ahead." But if you will have to dip into your emergency fund for the trip, then paying for the trip either way (in full or in stallments) may not be the best plan.
the_wiki
Posts: 3898
Joined: Thu Jul 28, 2022 11:14 am

Re: Any reason not to take advantage of extended pay plan?

Post by the_wiki »

Check the fine print. I bet the payments add up to being more than the $2700 charged. There is a lot of deceptive wording lately with these programs. Legally it may not be interest, but it is hidden fees that have the same effect.
Makefile
Posts: 2932
Joined: Fri Apr 22, 2016 11:03 pm

Re: Any reason not to take advantage of extended pay plan?

Post by Makefile »

the_wiki wrote: Wed Oct 30, 2024 1:49 pm Check the fine print. I bet the payments add up to being more than the $2700 charged. There is a lot of deceptive wording lately with these programs. Legally it may not be interest, but it is hidden fees that have the same effect.
Case in point: I have an $845 charge on my Citibank card. They offer flex play plan of a "fixed monthly fee and no interest" with 36 monthly payments of $26.50 each. An APR calculator says this is about 8.08% APR so not at all compelling.

Again, I do not know how they are able to do this without having to calculate and disclose the APR.
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