In today's world almost everyone uses credit. With little or no training on how to budget, save money or use credit wisely, people can get into serious financial difficulties.

A common powerful sales strategy trap used by retail stores is, "buy now and pay later" and it should be avoided. You can't afford the purchase now and you think you have the discipline to put aside the money to pay for your purchase in six months from now? In most cases, this miracle won't happen and this is what the third party finance company counts on.

When you "buy now and pay later," there is generally a deferral fee. The contract you sign is usually sold to third party finance companies and can have interest rates as high as 30%. Interest can be retroactive to the purchase date and calculated in full at the end of the deferral period if the account is not completely paid by the due date.

Wouldn't it make more sense to be patient and put money aside and pay cash for your purchase? This way you will know for certain that you can afford your new acquisition.

Another trap used by retail stores is credit cards with bonus points attached. These retail stores cards can carry interest rates calculated daily as high as 28.8%. If you must use credit cards and plan on carrying a balance, consider using a general credit card, such as Visa or Master Card, offering a lower rate of interest, or double your payments.

On the chart below, you can see that by simply doubling the minimum payment, you can save years and money on interest:

Credit Card balance of $1,000 at 28.8%

	Monthly Payment Amount	Paid Over # of Months	Interest Charged	Total Months / Interest Saved
Minimun 3%	$30	68	$1,036
Double	$60	22	$293	46 / $743