Catalogues with credit have been around for decades, but their popularity has increased drastically over the past few years. Among the major reasons that have seen this drastic increase include the fact that many people have begun realizing that using catalogues can be beneficial in a number of ways. Again, the catalogues themselves are so many, and most of them offer the Buy Now Pay Later Options which are attracting a lot of customers.
Also, today, we even have bad credit catalogues that specifically target shoppers with bad credit scores. However, before using a credit catalogue, it is important to understand how they work, their pros and cons. So in this article, we will take you through all you need to know about catalogue catalogues with credit to help you make an informed decision about using them.
What are Credit Catalogues?
Credit catalogues are online stores that offer customers a way to buy goods on credit. The customers don’t have to pay the entire cost at checkout; the catalogues offer a wide range of payment options. The customer has the opportunity to buy goods and pay later in small monthly or weekly installments. Often, the cost is spread over several months (usually 12-24 months). Some catalogues even allow shoppers to choose when they can start making payments for the goods purchased.
Catalogueue credit (purchasing goods on credit from a catalogueue) is also commonly referred to as a mail order account or a shopping account. It is important to note that catalogue credit is very similar to a bank loan and, therefore, you should see to it that you make repayments as required of you. Missed or late payments hurt your credit scores just like missed loan repayment does. Again, if you entirely default, the credit catalogue may sell your debt to, say, a collection agency and they can even sue you.
How Do Credit Catalogues Work?
To use a catalogue with credit, you must be over 18 years old, have a regular income source, a valid bank account, and a permanent address history. Next, you will need to fill an application form to sign up with the catalogue of your choice. The application process itself is very simple, and you typically get feedback within minutes.
Upon approval, you’ll need to create your personal account through which you’ll manage your purchases, as well as, payments. This personal account cannot be transferred to any other person, not even your family members. This is because all the financial obligations are only vested in the person that registered the account. Credit catalogues allow only one account per person. However, many of these catalogues have different affiliates, and they allow you to purchase goods from these sister companies from your registered account.
Once your application has been approved and you have created an account, you can start shopping immediately. While many catalogues usually check your credit history before giving you credit, some bad credit catalogues aren’t concerned too much about the shopper’s credit history. With these catalogues, you can buy goods even with a very poor credit history.
Credit catalogues limit the shoppers’ purchases depending on various factors such as credit scores. The sum of the limit granted often varies from one catalogue to another. In most cases, a limit doesn’t exceed £500, but if you make regular payments, your limit can be increased to even £2500 or more.
As noted, catalogues offer different payment options. You can choose to spread your cost over several months or weeks and make payments directly through your account via online payment systems. The credit catalogue may also send bank statements so you can complete payment through Post Office, your bank, your PayPal account, or any other method agreed upon.
The Interest Rates
Most credit catalogues available today offer interest-free credit. This means that for some specified period, usually between 3 to 12 months, your monthly payments don’t include any interest rate. It, therefore, implies that if you manage to pay off the amount owed within this grace period, the entire cost of the items bought will be the same as when the items are bought without credit. However, if the interest-free period elapses without you having completed payment, then your monthly installments will include interest.
Interest rates vary from one catalogue to another, with the lowest on the market being around 18%. This is roughly about the same APR you get on a credit card. The rate can go as high as 60% per annum or even more. This, however, applies to bad credit catalogues or long-term payments. The average interest rate for credit catalogues is about 40%. Remember you can always avoid interests by paying off within the interest-free period.
A few important things to note;
– Before signing up for any Buy Now Pay Later option, read the terms and conditions very carefully. Compare offers from different credit catalogues; you could find better options with lower interest rates and even small insurance.
– See to it that your monthly installments do not exceed 10% of your monthly income. This way, you won’t find it difficult to make payments. The chances of missing payments or paying late will, therefore, be greatly reduced.
– It is not advisable to open an account with a credit catalogue that has repayment periods of more than two years. Often, long-term credits come with very high interest rates.
The Pros of Using Catalogues with Credit
• Guaranteed approval. Most credit catalogues, especially bad credit catalogues have 100% approval rates. So even with a poor credit score, you can still sign up and start shopping.
• They have a wide range of products. Almost everything sold in regular online or brick and mortar stores is available on credit catalogues.
• They can help you to improve your credit rating. If you make payments regularly as required, your credit rating will gradually improve.
• You can spread costs. This makes payment easier, and you can, therefore, acquire expensive items and still be able to pay.
• They can save you money. They offer a lot of incentives such as free deliveries, coupons, huge discounts, and various promotions.
The cons of Using Catalogues with Credit
• Some, like bad cred catalogues, have high interest rates
• Missed or delayed payments will still hurt your credit rating
• It’s easy to be lured into buying too much
Many people are using catalogues with credit today, and as we have seen, there are more benefits than drawbacks that come with them. So long as you do everything right, you are sure to have a great experience shopping with a credit catalogue.