Be Careful With Web Pay Alternatives
WSJ - January 10, 2008 - D5
Alternative web payment systems (PayPal, Bill Me Later, eBillMe, etc.) can be useful, but there are some pitfalls:
- Fraud protection on unauthorized purchases with credit cards is mandated by federal law. Fraud protection with alternative web payment systems is voluntary and limited.
- Services that extend a new line of credit (and then max out that line) can cause a precipitous drop - up to 100 points - in your credit score.
- Interest rates can be much higher on pay later services, ~20% annual rate versus ~14% for the average credit card.
Buyer - and payer - beware.
Tags: Credit, Fraud, Web Payment Systems