Practices sometimes _____ on payment plans.

• A. waive fees
• B. charge interest
• C. extend terms
• D. offer discounts

Answer: (B)

Charging interest on a payment plan reflects the financing cost of letting someone pay over time. When a debt is repaid in installments, the lender faces the time value of money and the added risk of nonpayment, so interest is added to the outstanding balance to compensate and keep the arrangement financially viable. Waiving fees or offering discounts are concessions, not the ongoing financing charge that accompanies a plan. Extending terms can occur, but the hallmark practice described here is the interest that accrues as payments are spread out.