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  Reply # 1121688 4-Sep-2014 11:14
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Zero interest finance is the bait, the hook in the Smiths City mailer today is that interest is calculated from date of sale and will be applied if the sale price isn't paid off by the end of the finance period. I believe that some contracts revert to interest as soon as any payment is missed.

Unless it's a deal where finance is subject to approval like real estate I can't see why cash would make a big difference unless you're talking black economy.

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  Reply # 1121744 4-Sep-2014 12:09
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I was under the impression that retailers get their money from the finance company at time of sale - then you owe the finance company and they own the relationship.

I could be entirely wrong.

As has been said, don't forget to factor in monthly charges, booking fee and other bollocks that add money.

Plus the fact you are paying off a rapidly depreciating asset for longer than it's useful life in some cases.

People in general have AWFUL financial knowledge and practice. I WANT IT NOW seems to be the prevailing purchasing criteria.

Then you end up with crippling monthly payments for years and you are utterly unable to handle any unexpected expenses.



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  Reply # 1121778 4-Sep-2014 12:53
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wasabi2k: I was under the impression that retailers get their money from the finance company at time of sale - then you owe the finance company and they own the relationship.

I could be entirely wrong.

As has been said, don't forget to factor in monthly charges, booking fee and other bollocks that add money.

Plus the fact you are paying off a rapidly depreciating asset for longer than it's useful life in some cases.

People in general have AWFUL financial knowledge and practice. I WANT IT NOW seems to be the prevailing purchasing criteria.

Then you end up with crippling monthly payments for years and you are utterly unable to handle any unexpected expenses.




Too true. Dontcha love interest free finance for 5 years on a PC?!

What do you call a 5 year old PC?

A paperweight!





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  Reply # 1121787 4-Sep-2014 13:06
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Geektastic:
wasabi2k: I was under the impression that retailers get their money from the finance company at time of sale - then you owe the finance company and they own the relationship.

I could be entirely wrong.

As has been said, don't forget to factor in monthly charges, booking fee and other bollocks that add money.

Plus the fact you are paying off a rapidly depreciating asset for longer than it's useful life in some cases.

People in general have AWFUL financial knowledge and practice. I WANT IT NOW seems to be the prevailing purchasing criteria.

Then you end up with crippling monthly payments for years and you are utterly unable to handle any unexpected expenses.




Too true. Dontcha love interest free finance for 5 years on a PC?!

What do you call a 5 year old PC?

A paperweight!


Or Interest free on $995 product. Booking fee, Admin fee, etc totalling $80.  Claytons Interest, interest when its not really interest

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  Reply # 1121830 4-Sep-2014 13:44
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Geektastic:
wasabi2k: I was under the impression that retailers get their money from the finance company at time of sale - then you owe the finance company and they own the relationship.

I could be entirely wrong.

As has been said, don't forget to factor in monthly charges, booking fee and other bollocks that add money.

Plus the fact you are paying off a rapidly depreciating asset for longer than it's useful life in some cases.

People in general have AWFUL financial knowledge and practice. I WANT IT NOW seems to be the prevailing purchasing criteria.

Then you end up with crippling monthly payments for years and you are utterly unable to handle any unexpected expenses.




Too true. Dontcha love interest free finance for 5 years on a PC?!

What do you call a 5 year old PC?

A paperweight!


Depends on how high spec it was, as a 5 year old high spec PC should still be good. You can buy new PCs cheaply today, but they are basically running hardware in them that was top of the range 5 years ago.

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  Reply # 1121852 4-Sep-2014 14:00
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I never pay cash, the money is better in my account against my mortgage. I also use credit card for paying all bills and making most purchases. Got about $900 worth of Air Points which I can use for accommodation away.

The days of paying cash and reaping any advantages are gone. (bar mabey buying a used car).


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  Reply # 1121883 4-Sep-2014 14:51
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heylinb4nz: I never pay cash, the money is better in my account against my mortgage. I also use credit card for paying all bills and making most purchases. Got about $900 worth of Air Points which I can use for accommodation away.

The days of paying cash and reaping any advantages are gone. (bar mabey buying a used car).



There is a difference with paying by credit card and paying off the full amount each month, which is essentially paying cash but delaying payment by a month, and putting the amount on credit and only paying off the minimum amount each month.
If you are only paying off the minimum amount then any airpoints you get would be false economy.

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  Reply # 1122009 4-Sep-2014 16:55
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mattwnz:
heylinb4nz: I never pay cash, the money is better in my account against my mortgage. I also use credit card for paying all bills and making most purchases. Got about $900 worth of Air Points which I can use for accommodation away.

The days of paying cash and reaping any advantages are gone. (bar mabey buying a used car).



There is a difference with paying by credit card and paying off the full amount each month, which is essentially paying cash but delaying payment by a month, and putting the amount on credit and only paying off the minimum amount each month.
If you are only paying off the minimum amount then any airpoints you get would be false economy.


Correct, we pay off the full amount each month so no interest.

Keeps $$ in our account slightly longer (we have floating mortgage). Adds up over time.

 

Got lucky (or unlucky) enough to have surgery this year $9000 worth (covered by insurance). We opted to pay via credit card and claim back. Got a few airpoints on that one :)



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  Reply # 1122010 4-Sep-2014 16:59
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heylinb4nz: I also use credit card for paying all bills and making most purchases. 


Paid off and got rid of my credit card about three years ago.  Finally realised I can't be trusted with one.

Don't miss it one bit.

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  Reply # 1122312 5-Sep-2014 08:57
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nate:
heylinb4nz: I also use credit card for paying all bills and making most purchases. 


Paid off and got rid of my credit card about three years ago.  Finally realised I can't be trusted with one.

Don't miss it one bit.


We work our finances in very much the same manner as heylinb4nz, the only difference is it's a revolving mortgage account that our money sits in prior to paying the credit card off.

While this is a really effective way of managing one's finances, and indeed 'making money' off the bank, it totally requires scrupulous management, so will only work for those anal enough to bother with the hassle! For example, we will never spend money on our credit card that we can't pay for from savings; I also track spending down to the cent, updating a spreadsheet on at least a daily basis.

For most people, this level of control is just too much bother. And for many, even just using a credit card "properly" (ie, paying off in full at the end of the month) is not easy - in such cases, I agree that avoiding using a credit card is a good option, and I wish more would follow this. Of course, banks rely on a good number of customers finding the temptation of "free" credit too much and/or managing repayments too difficult to enable them make a nice juicy profit off credit cards, thanks to those exorbitant interest rates (that have no relationship to the OCR or current mortgage rates).

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  Reply # 1122315 5-Sep-2014 09:11
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jonathan18:
nate:
heylinb4nz: I also use credit card for paying all bills and making most purchases. 


Paid off and got rid of my credit card about three years ago.  Finally realised I can't be trusted with one.

Don't miss it one bit.


We work our finances in very much the same manner as heylinb4nz, the only difference is it's a revolving mortgage account that our money sits in prior to paying the credit card off.

While this is a really effective way of managing one's finances, and indeed 'making money' off the bank, it totally requires scrupulous management, so will only work for those anal enough to bother with the hassle! For example, we will never spend money on our credit card that we can't pay for from savings; I also track spending down to the cent, updating a spreadsheet on at least a daily basis.

For most people, this level of control is just too much bother. And for many, even just using a credit card "properly" (ie, paying off in full at the end of the month) is not easy - in such cases, I agree that avoiding using a credit card is a good option, and I wish more would follow this. Of course, banks rely on a good number of customers finding the temptation of "free" credit too much and/or managing repayments too difficult to enable them make a nice juicy profit off credit cards, thanks to those exorbitant interest rates (that have no relationship to the OCR or current mortgage rates).

I don't agree that you have to be that "anal" about it. It just requires that you spend, on average, less than you earn (or budget) for the month. My CC can skyrocket some months, but other months will be quiet. All it takes is knowledge that my wife and I live within our means, even if that means we can be frivolous sometimes. Since we have a revolving credit mortgage we always know we can pay it off each month.

You talk about not buying anything that you can't pay for from "savings". But what savings do you have with a revolving credit mortgage? Presumably all your "savings" are in your mortgage ("earning" you the prevailing interest rate, tax free).

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  Reply # 1122323 5-Sep-2014 09:28
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bazzer: I don't agree that you have to be that "anal" about it. It just requires that you spend, on average, less than you earn (or budget) for the month. My CC can skyrocket some months, but other months will be quiet. All it takes is knowledge that my wife and I live within our means, even if that means we can be frivolous sometimes. Since we have a revolving credit mortgage we always know we can pay it off each month.

You talk about not buying anything that you can't pay for from "savings". But what savings do you have with a revolving credit mortgage? Presumably all your "savings" are in your mortgage ("earning" you the prevailing interest rate, tax free).


I guess the "anal" bit is partially related to income - the more well-off one is, the more feasible it is for there to be a gap between income and outgoings, and therefore the less anal one would need to be. I have worked this system when I was a student and our only income (for a family of four) came from my wife's 20 hours a week, and I find it most effective to carry on in the same manner even now we are financially ok.

Note the speech marks around "savings"! As mentioned, I run a complex spreadsheet - each fortnight a specifc amount is allocated across a bunch of virtual 'savings' accounts (columns in the spreadsheet). Any spend for puposes covered by these 'accounts' is deducted from the spreadsheet at the time, even though most of the spend is on the credit card. The actual money sits either in the revolving credit account negating interest on the actual mortgage, or, as currently, where savings fully cover the revolving credit balance the remainder is transferred to an external savings account earning interest. Essentially it's an off-set mortage without the cost attached - more work but at no cost.

(Edit for typos)

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  Reply # 1122395 5-Sep-2014 10:46
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I have worked in retail for 11 Years for various companies from management to sales. 

First off short (12-18Months) interest free often costs the retailer around the same as a credit card transaction and what most seem to deem as cash often is a swipe of the credit card.

Do those in retail have a moral obligation to not sell to those who can not afford it? Not in my opinion I would suggest the finance company has 100% of the burden here because you can not tell peoples financial position by taking to them. 

Some companies put enormous pressure there staff to sell extended warranties. I would suggest if you do not agree with it you shop at other retail outlets that do not, it should be fairly obvious what ones they are.

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  Reply # 1122406 5-Sep-2014 10:59
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Stan: Do those in retail have a moral obligation to not sell to those who can not afford it? Not in my opinion I would suggest the finance company has 100% of the burden here because you can not tell peoples financial position by taking to them.


By suggesting retailers and their employees don't need to take any moral responsibility in this area is a cop-out. There is well-documented (if annecdotal) evidence of salespeople crossing the line of what's morally acceptable - and this not only within but also beyond the discussion topic (ie, extends to inappropraite sales generally, not just warranties), eg the Dead Sea cosmetics sellers in malls.

Stan: Some companies put enormous pressure there staff to sell extended warranties. I would suggest if you do not agree with it you shop at other retail outlets that do not, it should be fairly obvious what ones they are.


The only problem is that those most vulnerable to heavy-handed sales techniques are probably also those least aware of the state of play (CGA etc) and even that they're being taken for a ride, and also probably less likely to complain (or even know the avenues to do so). I'd make a guess that GZ participants are probably not the typical prey of such sales people.

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  Reply # 1122411 5-Sep-2014 11:06
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jonathan18:
Stan: Do those in retail have a moral obligation to not sell to those who can not afford it? Not in my opinion I would suggest the finance company has 100% of the burden here because you can not tell peoples financial position by taking to them.


By suggesting retailers and their employees don't need to take any moral responsibility in this area is a cop-out. There is well-documented (if annecdotal) evidence of salespeople crossing the line of what's morally acceptable - and this not only within but also beyond the discussion topic (ie, extends to inappropraite sales generally, not just warranties), eg the Dead Sea cosmetics sellers in malls.

.


How do you determine the customers financial capability?  Do they smoke cigarettes, dope, drink a lot? Or do they live frugally but sensibly and are able to take on a loan or payment arangment. I dont disagree with your core point, but on the other hand, it is potentially dictatorial, i.e. you cannot tell people what you decide they are allowed or not allowed to do.  

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