Question

.
You accepted a major retailer's credit offer to buy home gym equipment without having to pay principal or interest until next year. You didn't think about the impact on your montly budget because a full year seemed so far away, and you even hoped to have a better paying job by then. When the year is up, and the bills start arriving for the equipment, you don't make payments on the principal or interest. What do you think will happen? choose all that apply

A.
You will be held legally responsible for making payments.

B.
You will have difficulty getting different kinds of credit in the future.

C.
You can explain your situation to the retailer, and you will only have to pay on the interest.

D.
You can explain your situation to the retailer, and you will only have to pay on the principal.

Answer 1

Correct answers: A and B.

Why:
- A: True — you signed a credit agreement, so you remain legally responsible for repaying what you owe. If you don’t pay, the creditor can assess late fees, charge interest, report the account delinquent, and ultimately pursue collection or legal action.
- B: True — missed payments and delinquencies are reported to credit bureaus and will hurt your credit score, making it harder or more expensive to get other types of credit later.

Why C and D are incorrect:
- Retailers or lenders are not likely to accept a simple explanation and make you pay only interest or only principal. In many “no-pay/no-interest” promotions (deferred-interest offers), failing to pay as agreed can cause interest to be applied retroactively to the full purchase amount, plus fees. Even if a lender offers relief, it will usually be a negotiated plan — not a blanket waiver of principal or interest.

What to do now:
- Contact the creditor immediately to explain the situation and ask about hardship programs, a payment plan, or temporary relief.
- Review the contract’s terms (especially deferred interest language).
- If needed, get help from a nonprofit credit counselor.