Consumers may not realize they’re making risky bets with warranties, cash advances and other seemingly routine transactions.

by: Geoff Williams

You don’t have to play the lottery or go to Vegas to lose your shirt. Consumers make risky bets with their money all the time. In fact, you may be a gambler and not even know it. Here are just a few ways you may be playing a game of chance with your money.

Deferred-interest payment plans. You’re probably familiar with this deal: You buy carpet, furniture or another product on a store credit card, and you owe no interest if you pay the item off within a certain period – often six to 12 months. Medical credit cards often offer these deals, too.

But deferred-interest plans can be a gamble. You’re betting you can make all of your payments before the time is up – and if you don’t, you will lose money. Maybe a lot.

Katie Ross, education and development manager at American Consumer Credit Counseling, explains the financial damage you can do with a deferred-interest payment plan this way: “If you made a purchase of $1,000, and you needed to pay off the balance within a 12-month period, and you missed a payment or didn’t pay in full within the 12-month period, depending on the [annual percentage rate], you would be charged retroactively for all 12 months.”

continue reading »