When ordering items online, there are dozens of catalogues which you can choose to order from. However, some offer more financing options than others do; additionally, some catalogues will provide you with interest free periods, so you can spread the cost of the purchase total over a period of time, as opposed to having to pay the entire amount at once. So, what are the benefits of this, and what do you have to understand if you do shop with interest free catalogues?
Benefits –
There are a number of benefits to this type of purchase agreement including:
- You spread the cost. Rather than paying $1500 all at once, you can spread this over a period of time.
- You can buy items you otherwise wouldn’t be able to afford. Since you can spread the cost, you can buy pricier items, without having to worry about huge interest charges.
- Many catalogues will give you up to 52 weeks (1 year), as long as you spend a certain amount. So, as long as you properly budget, and know how much your monthly payment is, it is far more affordable to pay over the period of one year, rather than one day.
Factors to consider –
Yes, it is beneficial and gives you freedom when shopping, but interest free catalogue shopping is something you shouldn’t take lightly. For starters, if the full amount isn’t paid off by the maturation date, you will incur heavy interest rates (typically 30% or higher). In addition to this, you will pay interest on the full purchase amount, not just the remaining balance. You also have to be good at budgeting. Make sure you make a plan, and that you can afford the payments.
Another thing to consider is the credit check. Interest free credit accounts with a catalogue aren’t a guarantee, so if you’re credit score isn’t great you may find yourself getting refused which can make it more difficult to get accepted for credit in the future. Alternatives such as catalogues with no credit check charge very high interest rates so you have to be very careful.
For most, this type of financing agreement is very beneficial. But, you do have to know the terms in full, know how much time you have to repay, and understand the interest accrual, if the total is not paid by the maturation date, in order to determine if this form of purchasing is right for you.
