Don't touch Bill Me later with a 10 foot gift wrapped pole!

account is still on the books Last night one of my colleagues shared that she thought many cash-strapped consumers may turn to a service such as Bill Me Later to get through the holiday season and wondered what I thought of the service. If you are thinking about using Bill Me Later or a similar service to buy gifts this year keep reading to get my opinion on these short term lenders.

One good reason not to use Bill Me Later is that it requires a credit check. This means, if you open an account your credit score will get dinged the same as if you opened a regular credit card. Given the current economic issues, protecting your credit score should be at the top of your list!


The second reason why I wouldn't go near Bill Me Later is that the standard interest rate is 19.99% APR, a rate much higher than most credit cards. The normal grace period for a Bill Me Later loan is 25 days, so unless you really think you are going to have the money in less than a month to pay off the purchase you're going to be hit with some nasty finance charges!

Perhaps Bill Me Later's biggest draw is that it offers a "No payments for 90 days" promotion at many stores, almost always with a minimum purchase requirement. I hesitate to get preachy about how you should spend your money but, if you need to defer payment on something for 90 days in order to get it, you shouldn't be making holiday purchases that meet $100, $250 and $500 minimums. Bill Me Later doesn't charge any interest if you pay it off before 90 days, but if you pay late you're on the hook for the all of the finance charges, possibly turning a $100 purchase into a $160 purchase!

If you really feel the need to finance your gift giving this year my advice would be for you to to make use of your credit card's standard grace period or apply for a credit card with an introductory rate of 0% and pay of your balance before the 6 month promo ends. By going this route not only do you have longer to pay but also have the benefit of building your credit history with a revolving line of credit. Then again, with the current financial crisis friends and family should be better able to understand your holiday cutbacks and the reason you decided to shun
a "Credit Card Christmas" this year.

Increase your money and finance knowledge from home

Timing Your Spending

How to pay less by changing when you purchase.

View Course »

Intro to Retirement

Get started early planning for your long term future.

View Course »

Add a Comment

*0 / 3000 Character Maximum

7 Comments

Filter by:
Noelle

I have to agree with everyone else who posted here. The interest rate is very high - can't argue there - but the no interest grace period of 6 months for spending only $99 is amazing. If you're not able to pay $16.50 a month, than yeah, I'd agree to stay away. But that's a really good financing opportunity in my book.

March 23 2014 at 10:20 AM Report abuse rate up rate down Reply
Mike Loeven

i have to disagree about protecting your credit score. i didn't have a credit rating and i am using bill me later to hopefully improve my score routing all pay pal purchases through the service and than paying off in full

November 14 2013 at 7:13 AM Report abuse rate up rate down Reply
Heather

Meh. I got 6 months to pay off my Christmas. I have $165 (left) to pay off by June 12th. Interest free shopping that I didnt have to pay back immediately was great. Family had a great Christmas and I didnt have to pay for it up front.. or interest. I call that excellent. Now if you cant afford the pay it off before the interest accrues... I then concur.

April 03 2012 at 12:26 PM Report abuse rate up rate down Reply
one straight guy

really, that is the basics of finance 101. live within your means, and when absolutely 'necessary' only use credit that will allow you to avoid interest for an extended grace period, and at the lowest possible rate. i wouldn't slam billmelater unless you have had an unpleasant personal experience as one of their customers. fact of the matter, we used our billmelater account to fund our summer vacation this past summer. of course we are paying back all of our obligations each month, with added interest, but it's kind of like the commercial says...'priceless' happy new year 2012!

See full article from DailyFinance: http://srph.it/nml7q7

January 01 2012 at 9:27 AM Report abuse rate up rate down Reply
1 reply to one straight guy's comment
one straight guy

ps. i'm really not carson! he he he

January 01 2012 at 9:27 AM Report abuse rate up rate down Reply
one straight guy

really, that is the basics of finance 101. live within your means, and when absolutely 'necessary' only use credit that will allow you to avoid interest for an extended grace period, and at the lowest possible rate. i wouldn't slam billmelater unless you have had an unpleasant personal experience as one of their customers. fact of the matter, we used our billmelater account to fund our summer vacation this past summer. of course we are paying back all of our obligations each month, with added interest, but it's kind of like the commercial says...'priceless' happy new year 2012!

See full article from DailyFinance: http://srph.it/nml7q7

January 01 2012 at 9:25 AM Report abuse rate up rate down Reply
one straight guy

really, that is the basics of finance 101. live within your means, and when absolutely 'necessary' only use credit that will allow you to avoid interest for an extended grace period, and at the lowest possible rate. i wouldn't slam billmelater unless you have had an unpleasant personal experience as one of their customers. fact of the matter, we used our billmelater account to fund our summer vacation this past summer. of course we are paying back all of our obligations each month, with added interest, but it's kind of like the commercial says...'priceless' happy new year 2012!

See full article from DailyFinance: http://srph.it/nml7q7

January 01 2012 at 9:25 AM Report abuse rate up rate down Reply