Payments are instead spread across a certain time period in regular instalments or delayed sums. There are several pros and cons to this method of purchase. It is important for prospective catalogue shoppers to understand these before opening a credit account.
How Do Catalogues with Credit Accounts Work?
Some of the more famous catalogue companies are Freemans, Littlewoods, Grattan, Kays, Argos and Studio catalogue. Most of the big players offer credit to their customers. These are essentially loans that people can pay back within a period that may last 3 to 12 months. It is an incentive for people to make purchases right away instead of waiting around until they save up for the cash price.
Companies could make it even more attractive by waiving interest within a specified timeframe. Others will begin charging interest from the date of purchase. Be sure to read the terms.
How Does Catalogue Credit Accounts Compare with Other Forms of Borrowing?
Catalogue credit is not the most expensive type of borrowing. Neither is it cheap. Compared to other ways to borrow money, it does not always provide the more favourable rates. For example, the interest rate is often higher for catalogue credit in comparison with the average credit card. So why do people use this instead of a card?
Usually because it is easier to obtain and more convenient to use. Credit card companies tend to perform thorough background checks before approval. Some catalogue companies are relaxed when it comes to providing credit accounts.
You can compare catalogues with credit at Finance.co.uk here.
Some Considerations before Using Catalogue Credit
With credit at your disposal, it can be tempting to make purchases left and right without much thought. There are no immediate consequences as payments are not required until later. It is easy to think that everything will work out in the end as you have plenty of time to pay the loans. Things add up and the total can become overwhelming.
Late and missed payments have additional costs so they should be avoided. Shoppers must manage their credit intelligently to steer clear of these fees.
Before making an order, a person must evaluate whether the item is truly necessary or not. Impulse purchases can be dangerous, especially if the cost is rather high. Luxury items should ideally be bought with disposable income and not with credit.
If you have money left after settling bills, buying necessities, and saving a bit for a rainy day, then you can certainly buy anything you want with your spare cash. Using credit accounts to acquire extravagant gifts for yourself or others may backfire if you are not able to pay for them on time in the future.
If there are expensive yet essential items on your wish list, then consider their urgency. Do you really need to upgrade to a new laptop right now or is your current computer still holding up fine? Maybe you can save up for it instead of taking out credit. You could even upgrade parts instead of replacing the whole thing to speed things up.
Whenever you see a compelling product on a catalogue, check out other catalogues and stores to see if the same thing is being offered at a cheaper price. You might find a large discount somewhere else with just a bit of research. You might also consider getting a similar item by another brand to enjoy the lower cost. If you don't mind having second-hand goods, then you can get even better deals.
If you must absolutely borrow to make a purchase, then at least check out other options aside from catalogue credit. It might turn out to be the best choice after all, in which case you can go ahead with your plan. In case you find better methods of paying for the merchandise, use those instead.
What are the Pros of Catalogue Credit Accounts?
One of the main draws of catalogues is that they will usually provide customers with interest-free periods. It is like getting a loan without paying for the service in the form of interest. You can truly get the products you want right away without incurring additional burdens.
However, this will only work well if you can pay for the balance within the specified period. Otherwise, you might end up with large debts that continue to grow while you find ways to repay them.
This is a valid way to get necessities right away. If you cannot wait to save enough for your purchases, then use catalogue credit. It should be good for acquiring school or business-related requirements. Certainly, this often proves better than going for a costly payday loan. Use it sparingly and responsibly and you should be good to go.
What are the Cons of Catalogue Credit Accounts?
On the other hand, having such credit at your disposal can make you buy too many things at once. You might think that the interest-free period is long enough to repay everything but that is not always the case. If you were too optimistic in your estimates, then you could end up staring at a significant balance after the grace period is over. You will then have to face the high interest rates that can range from 30% to 40% APR.
That is a large amount to add to the cost of the items. If you miss payments, your credit score will suffer as well. Catalogues with credit accounts can be useful but be sure to manage your purchases wisely.