Interest Free Terms

[Scotland]

I don't see a big distinction between credit cards and interest free deals, which in most cases by extension are credit cards. The trade-off for the extended interest free period (12 months etc. instead of 1 or 2) is the higher interest rate.

As far as marketing goes, I think 'balance transfers' are from the same school as thought as interest free periods. By offering balance transfers you're effectively saying 'bring your accumulated debt that you haven't paid off here and we'll charge you low interest on it for a period then high interest after that'. I'm sure card providers don't really want you to clear your $5k balance in 6 months when the interest period is 3%, they want you to have some or all of the balance remaining when the interest rate becomes 15 or 20%.

Ascending rates I have not come across, but would steer well clear of. Again, provided it's explicitly stated in the T&Cs the customer should know what he or she is signing up for.

Good thread.

 

[Caesar]

The distinction to me is strategy behind it from the business's perspective. Are you genuinely pricing the cost and risk of the service that is being provided to that particular consumer? Or is your intention simply to cast a wide net, and only profit off some people (but turn the screws to a massive extent on them)?

Sometimes that is a bit hard to tell from an outside perspective, which is why I say it's not always black and white. These interest free deals are pretty much a clear case of the latter however.

 

[13_Stitches]

Interest free and credit cards are fine if you're smart about it. If you plan out how you will pay them off and stick to the plan, you cant go wrong, it's like saving backwards, to an extent. I've had things on 24 months interest free and had them paid within 6 months, no drama's. Just never leave it to the last minute.