Deferred Payment Option

You’re going on a double date to a movie and your friend takes out a credit card to pay for all four tickets. You tell your friend you can go to an ATM to pay for your ticket and your date’s ticket, but the friend tells you not to worry, and to pay him back in the future. By opting to take payment later, he could be said to be exercising a "deferred payment option."

Deferred payments in the options arena are often a structured and complex affair that offer certain long-term advantages and often are traded in alternative markets. Roth IRAs are another type of deferred payment option vehicle. Most deferred payments for investors usually are tied to tax laws and retirement accounts or other types of vehicles which have tax deferred incentives.

On the lending side, deferred payments are exemplified in other light by college loans, which are usually not due until after one’s graduation.

This adumbration is merciful for liberal arts majors everywhere. We'll see you for that loan paper burning party when you're 40.