When you shop using a catalogue you will normally be offered options for spreading your payments over a period of time. This can obviously make large purchases more affordable but often these flexible payment options include high rates of interest which means that credit catalogues can work out to be an expensive way to borrow money in the short term. Catalogues with credit are a great way of purchasing goods by post or online, with the repayments being spread over a number of weeks or months. Customers can apply for their own catalogue account or purchase items through a friend, neighbour or relative with an existing account, called an agent. Catalogue credit or shopping accounts are offered by the majority of catalogue companies including Littlewoods and Lookagain.
Types of Credit Catalogues
There are a number of terms associated with credit catalogues and we will go over them here to give you a run through of what to look for when buying on finance from a catalogue.
- Buy now pay later catalogues – these allow you to buy what you want now and pay for it at a later date. This means no monthly payments, you simply pay nothing for up to 12 months, for example.
- Pay monthly and Pay Weekly – as the name suggests, these allow you to pay back what you owe in monthly or weekly installments. These are ideal for people who struggle to save.
- Bad Credit and No Credit Check – these catalogues are ideal for those of us who have a poor credit rating. In reality, no credit check catalogues do not exist, however, catalogues for people with bad credit do!
Most of the large catalogues offer interest free credit as long as the cost of the item is repaid within a set period of time, however if items are not paid for in full during the interest free period, catalogue credit is not cheap with an example APR of up to 30%. Catalogue credit without the interest free “honeymoon” period is similar to a loan, you have set repayments over a set period of time. In addition there may be additional costs for events such as late or missed payments.
The advantages of using credit catalogues is that if you can pay off your balance during the interest free period, the credit is free. In addition using catalogues can work out cheaper than other forms of credit such as payday loans when paying for necessary items like school uniforms. The disadvantages of using catalogues with credit is that you may be tempted initially by the interest-free period but end up not clearing the balance in full during this period and paying a high rate of interest, also if you miss a payment this could affect your credit score. In addition it could be extremely embarrassing if you have purchased items through an agent who is a friend or neighbour and then finding yourself in a position of not being able to make repayments to them, resulting in an awkward situation to say the least. Finally, any form of finance can entice customers to purchase items they would not buy if they had to stump up their own cash at the point of sale, sometimes easy credit does not seem like real spending – until the repayments become due!