How to splash someone else’s cash

Want to go shopping but have no money and no desire for credit cards? Not to worry. Since time immemorial, merchants have consistently devised canny ways of separating customers from their cash. And they are becoming quite creative lately.

Remember the old lay-bys? Okay. Now forget them. Today, lay-bys have been inverted so that you can take home the goods – rather have them put aside for you – while paying them off. And if you are conscientious with your instalments, you will never have to pay interest. Following are just three of the many ways you can shop for items you can’t afford now:

Certegy Ezi-Pay
The catchcry of this payment plan is “No interest ever”. After receiving approval from the company that operates this system, you can shop at thousands of retail outlets around Australia. Ezy-Pay extends a maximum limit of $5000. While there are no interest charges, there are book-keeping fees of $6.45 built into your regular, fortnightly payments. Setting up the account costs between $35 and $90. After your first purchase, subsequent purchases will incur a $22 fee. An unspecified penalty is levied if you are late with a payment.

The Ezi-Pay website has a calculator to work out how much your monthly instalments are across different terms. The minimum term is six months and the maximum is three years.

Afterpay
If you are not one for long, drawn-out repayment plans, Afterpay may suit you. This digital system, which is integrated with the retailer’s software, allows you to make an online purchase and spread the repayments across four equal instalments. Payments are due fortnightly.

It is free for shoppers as the merchant picks up the book-keeping tab. You do have to make sure the debit or credit account Afterpay is linked to has enough funds to cover the instalments. If you do miss a repayment, you will have to pay a late fee of $10 and a further $7 if the instalment remains unpaid for a week.

You can shop online using Afterpay at many of your favourite stores, from David Jones to Big W.

Creditline
This credit product has been around for decades and has helped me buy most of our household’s bulky goods and electronic equipment. I wait until a major retailer has an interest-free offer over a long term before I go shopping. My favourite terms are obviously the 60-month interest-free plans. Paying instalments over five years makes buying expensive goods convenient.

There is a $25 establishment fee for a new account and an affordable $4.95 monthly charge. A late fee of $20 applies for missed payments.

Rather than paying the minimum monthly instalment (which would leave me with a balance at the end of the interest-free period), I divide the cost of the purchase by the term. For instance, when I spent $1000 on a new bed using the 60-month interest-free offer, I made sure to make at least 59 equal payments of $22 a month. That figure incorporated the monthly charge and allowed me to clear the debt before the 60 months were up.

If you are careless to end up with a balance after an interest-free period your balance attracts a whopping 29.99 per cent interest rate. Let’s say I had a $200 balance at the end of 60 months. In the 61st month, interest of nearly $60 would be added to the balance. If no payments were made, the balance would have climbed to almost $350 in the 62nd month. By the 63rd month my balance would have more than doubled to $460 from the time the interest-free period ended.

This product is not for consumers who struggle with scheduled repayments, but can it can be very rewarding for those who are conscientious about paying their bills. It comes with a few bells and whistles, too. You can access up to $3000 in cash, although this will attract hefty interest from the get-go. For a fee, other features available are:

  • if an eligible item you purchase goes on sale at the same retailer (even if it’s a different location) within six months, Creditline will refund the difference up to $600
  • if an eligible item you buy is lost, stolen or damaged within six months, they’ll pay the cost of it being replaced or repaired up to $1000
  • if your CreditLine card is reported stolen, $200 will be paid into your account just for the inconvenience
  • if you can’t work due to sickness or injury or you lose your job, the account balance can be negotiated down by up to $5000
  • if you pass away, your balance is paid out up to $20,000.

Would you ever buy an item you hadn’t saved up for? Are payment plans more likely to have you wind up in big debt than credit cards?

Related articles:
Cash-back sites save you money
Make credit cards work
Crackdown on credit offers

Written by Olga Galacho

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