Does 5 years interest free sound too good to be true? It is...
We have all seen the interest-free offers advertised, with ’payments suited to your lifestyle’ which allow you to ‘enjoy the convenience’ and ‘buy today with the freedom and flexibility to pay it off over time’.
It can be tempting, especially if you are lusting after the latest tech or your 10 year old washing machine may have finally decided to ‘retire’.
You might be wondering what the catch is. Or at least you should be. There always is one.
This offer is a case in point:
- 50 months interest free (just over 4 years)
- 0% interest
- No deposit
Hmmm. You are thinking, that could work for me.
Let’s dig a little deeper and see if you feel the same way.
The small print
Glance at the terms and conditions and three points stand out.
- A $25.00 Establishment Fee applies to new approved applicants
- Account Service fee of $4.95 per month applies
- If there is an outstanding balance after the interest free period ends, interest will be charged at 29.49%
Not only is there a set-up fee and a monthly service fee but there is also an astronomical interest rate when the offer ends.
The same principle applies to credit cards. Find out what interest rates apply after the (oh so enticing) introductory offer finishes. What fees apply for late payment fee or going over your limit? Don’t forget to check out the annual card fee as well.
If you are happy to go ahead, then by all means do - just be aware of your obligations up front. Then set a reminder so you don’t miss your monthly repayments.
And if the idea of getting into debt makes your uncomfortable, you have other options. You could simply save up for the item and pay for it outright.You can learn more about debt and cash flow management in our resource section.