Friday, December 11, 2009

Adbusting: A 'Very' Expensive Christmas

Have you seen the adverts for the latest online department store? Fearne Cotton and Holly Willoughby feature in it, throwing in the word 'very' very often in the dialogue, as a bunch of ice skaters dance around and then arrange furniture on a frozen lake, before the name of the store is revealed:

What's very concerning, though, is that it could turn out to be a very expensive Christmas if you do your shopping on the website, using their credit services. Their typical APR is 39.7% variable, which is very bad on its own, but in the smaller print under this very big figure, the conditions state that: The actual APR applicable to you may be different from the typical APR based on your credit status. (bold original to website)

So if you have a very poor credit rating score, they'll punish you even more by giving you a higher APR which will push up the amount of interest you have to repay. A very expensive Christmas.

Yet that's not the worst of it. Imagine you've had a hard year, the credit crunch has taken hold, and you're wondering how you will manage for Christmas presents and giving your kids what they want. Imagine you had the chance of a buy now, pay later offer - would you take it? Christmas now, and pay for it later, when the economy has recovered and you're back in employment?

Very also offer a Buy Now Pay February 2011 service. What's so bad about that? Well, first of all, you can have all the joys of this Christmas 2009, escape paying for it, have another Christmas in 2010 before the bill comes in for Christmas 2009 in February 2011. You simply cannot keep deferring payments forever - the credit people at Very will come looking for their money.

Secondly, the bill they come looking for will be very big.

Interest will be calculated from the date of your purchase but it will not be charged to the account until the expiry of the Buy Now Pay Later period. You can avoid paying interest on the products purchased on this offer by paying the cash price in full prior to the expiry of the Buy Now Pay Later period. Typical 39.7% APR Variable. The actual APR applicable to you may be different from the typical APR based on your credit status.

So while you have an interest free period of time (which customers probably wouldn't use if they had the money in the first place), when the clock hits February 2011, the full weight of interest calculated from the day you bought the goods (December 2009) will be applied to your account. That's 14 months of interest of at least 39.7% (depending on your credit rating again) on top of whatever Christmas cost you. And that adds up to a very expensive Christmas.

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