Shops offer finance to attract customers. Australian credit cards include store cards that provide you with loyalty points and rewards. But they are not low rate credit cards.
If you like to shop a lot and want to avoid paying interest then lay-by is an alternative.
Store cards help you accumulate points.
If you continue to shop from the same store you should receive a nice gift card in your mail, which you can use to reduce the price you pay for your next purchase.
Or you receive a promotional offer to get you to spend even more.
They issue their own credit cards which offer loyalty points and rewards to get you to shop more with them. However the interest rate may be higher than that of credit cards offered by banks, but you could also get a longer interest-free period.
With store cards you sometimes get interest-free finance to buy a more expensive product, such as furniture or electronics.
You pay a small upfront amount or pay nothing upfront. You then pay installments over a couple of months and sometimes a couple of years. No interest there. Just an account management fee of several dollars.
With some offers you don't need to make any payment at all during the whole interest free period. With the exception of the monthly account fee.
Shop now and pay nothing for 48 months. Looks great, doesn't it?
But there's a big catch, come due date. If you have not cleared your debt on that day, all interest is counted back from the day you shopped. And you may not like what you see when you get the statement.
You will have to pay more interest every month, till you pay off the debt. But store cards are great to get that nice gadget you are after, as long as you know how to manage them.
Some stores are offering a lay-by option which can be a better option than paying by credit or store card, as long as you are happy to delay your gratification.
With lay-by, you pay a deposit and then pay installments for a couple of months, depending on the amount of your purchase and on the policy of the store.
The store will take your product off display and keep it for you. From an ownership perspective, it is not as good as the credit card. You have to wait till you finish paying for your item before you take it home.
But, money wise, it is much better than a credit card because you are not paying interest or account management fees.
As a conclusion, do not sign on the dotted line of any credit cards before you check the fine print and ensure you understand and are happy with all the terms and conditions.
Here is more information about Australian credit cards and money issues.
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