The lure of buying on credit can be tempting and sometimes saving to buy big-ticket items is difficult. Before deciding to buy now and pay later, the Ministry of Justice and Consumer Protection BC (CPBC) urge consumers to consider the true cost of buying an item on credit.
Consumer Awareness Week (March 15-22) was proclaimed with the goal of helping B.C. consumers know and understand their rights. Each day, the Ministry of Justice, Consumer Protection BC and key partner organizations are sharing important tips on a number of current marketplace issues under the theme "Take Five" - representing not only the number of tips released per day, but also the need for consumers to pause before making any purchasing decision.
Top five tips for buy now, pay later:
1. Watch the interest rates. Some businesses may offer a temporary low interest rate for the first portion of your credit payments. Make sure you are aware of how long the interest rate will be in effect and what the new interest rate will be after the initial offer.
2. Understand your payment obligations. Find out what will happen if you fail to make your payment on time or fail to make your payments. Will you be required to pay the full amount in a specific time? Will there be additional charges? Will this impact your credit rating?
3. Do your research. While one item may appear to be a better deal due to a lower interest rate, you should compare the overall expense - including any additional finance charges. Together, these costs represent the total cost of paying on credit and are reflected in the Annual Percentage Rate (APR) - the annual rate that's charged to consumers for borrowing.
4. Find out what "pay no interest" really means. Some companies will offer a period of time in which no interest is required to be paid. Read the fine print to know what charges you may incur if payments are not made during this period. Are you responsible for accrued interest, the total amount of interest starting from the first date of purchase, if you skip or do not make the payments?
5. Compare the cost of buying on credit. Consider any additional fees, such as finance charges and interest, that you will be required to pay if you buy on credit. How much less will you pay if you save up for the purchase and pay in full at the time of purchase?
- A December poll by CPBC showed that one-quarter of all B.C. consumers planned on using credit to buy their holiday gifts. To view the poll and learn other personal finance tips, visit: www.consumerprotectionbc.ca/corporate-news/1118-cpbcholidayspendingpoll
To access the daily Consumer Awareness Week Take Five tips, go to:
Twitter @ConsumerProBC using the hashtag #TakeFive2013.
If you have questions about your rights and responsibilities as a consumer in British Columbia, please contact Consumer Protection BC toll free at 1 888 564-9963 or visit: www.consumerprotectionbc.ca
Government Communications and Public Engagement
Ministry of Justice
Consumer Protection BC
1 888 564-9963 ext. 2824