No Interest - No Worries?!?! (from Today Tonight)

Buy now, and pay later - no interest, no worries. They're the innocent promises of the smiling salesperson. And a temptation that we used to try to avoid.

But now, it's a way of buying that Australians are turning to in their hundreds and thousands. And while the horror stories persist, can it really be a smart way to buy?

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Interest free purchases are everywhere - be it your car, your fridge, the flat-screen or lounge - and Australians love a deferred payment.

Skander Malcolm manages Retail Solutions at GE Capital, the largest provider of interest free purchase plans in Australia.

"In the last three years alone, we have done more than $2.2 million interest free transactions," Skander said.

"There are two main types: instalment interest free, that might be 3 years interest fee, so you pay fixed instalments to pay it off over that time frame," Skander said.

"And then the other type is buy now, pay later. So, it might be put a deposit down and you don't pay anything for twelve months and then you pay it all off in one go," he added.

Isabella and her brother Jamison are growing up in a world which runs on the promise of buy now, pay later.

Their mum, Caroline Birks, has practically furnished the house interest free.

"We've been able to buy a computer, a fridge and the big screen TV," Caroline said.

Caroline's family exemplify the 80% of interest free shoppers who never pay interest, but what about the other 20%?

Finance columnist for the Financial Review, Nicole Pederson McKinnon, warns of the dangers associated with interest free purchases.

"Interest free promotions sound tremendous don't they, but there are so many pitfalls in there, they are designed to trip you up," Nicole said.

"It is really important to remember that if you have a card with a minimum monthly repayment, those repayments are set so low that by the end of the period, you won't have paid off that debt at which point you will be slugged with an interest rate which might be 30 per cent - eye watering," she added.

Simone smith bought a $1499 couch interest free for six months. But she failed to repay the full amount in time and that's when the interest kicked in.

"It was around about 39 per cent," Simone said.

Simone wound up paying $5,000 for her $1,500 couch.

In this circumstance the message is clear - don't pay up before the interest free period is over and you'll get burned.

It's also clear that interest free purchases help retailers sell their goods - and retailers pay companies like GE to finance the interest free purchase plans.

"We make our money charging the retailer and the retailer is happy to do that because it helps them sell their goods," Skander said.

So do retailers inflate prices to cover this expense?

Retailing giant Gerry Harvey: "No, because there's a thing called the incremental dollar. So, if you're doing business and you sell a million dollars worth of products, you make so much money at that margin. Now, say you sell another million dollars worth of products and you make a lesser margin on it, it's still very profitable. The incremental amount becomes the profit," he explained.

"You know, it's like 4% or something of people that buy on interest free, that get into trouble repaying it. So the other 96% repay, 70%renew, they come back as repeat customers all the time," Gerry said.

So, how does interest free stack up against other credit options? If you pay off the principle in 36 months at $145 per month, $5,000 worth of goods on GE's Master Card will cost you $5,167.20, after fees.

If you pay $100 a month over 52 months, it will cost you $5,487.11, which is still $1400 cheaper than a personal loan for $5,000, paying $175.79 over 36 months.

And it's almost $2,000 cheaper than the same amount spent on a regular credit card, paying $145 over 51 months.

"Well interest free is the smartest way to borrow. Particularly as the base rates go up, it gets smarter and smarter because the alternative is that people put it on their mortgages and stuff like that, and that just get's more expensive," Skander said.

So interest free purchases can work, and do for a number of people. The key is to pay off your purchase in the right amount of time.

"Pay it off before the period ends or you will lose," Nicole warned.

From todays's SMH - As little as $1,000 could make you bankrupt unless the government stands firm

http://www.smh.com.au/business/as-little-as-1000-could-make-you-bankrupt-unless-the-government-stands-firm-20100127-myyy.html

174th AUSTRALIA DAY REGATTA – Tuesday, January 26

174th AUSTRALIA DAY REGATTA – Tuesday, January 26

Australia Day, 26 January 2010, will mark 174 years of Australians celebrating our National Day by competing in or watching the grand spectacle of the Australia Day Regatta on Sydney Harbour.

The 174th Australia Day Regatta is the world’s oldest continuous annual sailing regatta, a celebration afloat of the day when a small group of sailors, marines and convicts from the First Fleet hoisted the Union Jack on the shores of Farm Cove, founding the colony of New South Wales.

Forty-nine years later, a group of citizens of Sydney decided to celebrate the anniversary of that historic day by staging a regatta, originally called the Anniversary Regatta, now the Australia Day Regatta, which has been held every year since 1837 - in peace and war.

Our CEO on Radio 2GB on 06.01.10

Christian Oey, CEO of NoBankruptcy.com.au, was interviewed on Radio 2GB Sydney yesterday for about 20 minutes.

Hear the full replay on our site at www.nobankruptcy.com.au on the press page, or click on the link listed here.

Funny ads and misprints

from choiceaustralia

The Hard Word: Kate Dougan presents some of the funnier ads and misprints sent in by our readers. http://bit.ly/77uBHz

Credit cards CAN be your friend!

Credit Cards CAN be Your Friend
- from www.cheapskates.com.au

I use my credit card for the benefits only and it costs me $0 !!! I've been in credit card debt in the past, paid off my debt and I am NOT going back there. Instead, I get as much as I can from my credit card company - just as much as they try to get what ever they can from their customers!
How? I use a GO Mastercard - it costs $3.95 per month if there is a balance - or for me costs $0 as I clear the balance as soon as I make a purchase.
I only use my card to earn points, therefore I do not buy anything I can't afford. I pay the money straight back onto my card - which means my monthly fee is $0. No annual, card or additional card fees.
I then use my points to help me with Christmas and birthday shopping.
My points allow me to buy gift vouchers, books, toys - anything really, there is heaps to choose from and using points that have cost me NOTHING saves me a fortune at this time of year. Being November, this may not help for this Christmas HOWEVER if you start buying this years Christmas presents on credit card - think of all the FREE gifts for next Christmas!

Contributed by Renee, Oxenford

There are 7,921 other great money, time and energy saving tips in the Tip Store: http://www.cheapskates.com.au/pages/default.cfm?page_id=37936

Crappy Christmas TV ads

The worst thing about Christmas (apart from the crappy programming that gets rolled out year after year) is the crappy ads that run during the breaks in the crappy programs!

"Sale! Sale! Sale!" they shout!

At least with digital TV finally here, there are a few decent re-runs of Seinfeld to save the day!

How predictable and boring can they get. There are so many that the networks have given up trying to place them apart from each other, to give viewers some respite from all the shouting, anyway there just aren't enough non-sale ads being run for them to do that.

Last night there were even two competitors' suit sale ads running back-to-back!

No wonder TV audiences are shrinking! The programmers have all given up, and rolled over like a puppy playing dead.

I bet they've all got their resumes updated.