Shopping with catalogue credit is undoubtedly fulfilling. You get to shop now on credit and pay back later. You can pay in instalments; weekly or monthly. However, the repercussions can be bad if you fail to pay on time and as agreed. As a result, they can be a really expensive credit option.
Here’s how catalogue credit works
Catalogue credit is an option that many big catalogues offer. But the important question is, is it interest-free? Well, not really. If you get a mail order or catalogue credit, you have to pay for the item within the stipulated period for repayment for it to be interest-free. Otherwise, you would have to pay back what you owe with interest. Also, the repayment period for catalogue credits or mail orders usually ranges between 3 to 12 months.
Some catalogue credit comes with interest from the onset. Make sure you read the terms and conditions of the catalogue credit you’re about to take before you opt for it.
Things to consider before taking catalogue credit
- Is the item a genuine need? Frankly speaking, you shouldn’t take out credit to pay for luxury items like a piece of clothing. It is clearly not a need.
- Do you urgently need the item? If you can wait a bit longer to get the item, you probably shouldn’t take out a catalogue credit. If it is not urgent, start saving up for it.
- Have you checked the price of the item with other sellers? It is possible that other sellers have the item you seek and sell for a more affordable price. It might not be the branded version, but it will serve you well. You could also check out for sellers who sell at a heavily discounted price.
- Can you get less expensive credit for it? If it was impossible to get a cheaper version of the item, consider taking out a low-cost credit from elsewhere. Getting a 0% credit card is a great start. But make sure you pay before the 0% period expires.
Benefits of Catalogue Credit
- Some credits are interest-free. All you just need to do is ensure you pay up what you owe before the interest-free period elapses.
- You can pay for necessary items with this credit which is preferable to taking out a loan or bigger credit.
Downsides of Catalogue Credit
- The interest-free period is quite tempting. But, if you delay your payment, you might have to pay back what you owe with a higher interest. Let’s just say you’ll pay far more than what you borrowed.
- When you miss a repayment, it would greatly affect your credit rating. The effects are no different from when you miss a credit card payment or loan repayment.
- When you are unable to make the repayment, you could mess up meaningful relationships with your friend or neighbour, especially if you got the catalogue credit through them.
Some Added Extras
If you are unable to make repayments because you took ill or lost your job, you can take out a ‘life event insurance plan’. Catalogues might offer this plan to aid your repayment in such situations. They might also offer shopping insurance, which safeguards the items you purchase.
For those with no Credit History…
If you are new to taking out credit, you might find it difficult to take out a catalogue credit. The reason is simple. Your credit rating is clean and having no credit history makes it difficult for lenders to decipher your personality as a borrower.
Hence, to play safe, they classify you in the “bad credit” category. So, catalogues for bad credit is your best bet. Getting a catalogue that doesn’t carry out a credit check can be very difficult as they rarely exist. However, if you manage to get one, their interest rates might be extremely high. Also, you would still need to present your recent bank statements, thus approval is not guaranteed.