Buying on credit expensive

Charles Stevenson, Edgemead

Your article (“Pensioner’s burden of debt lifted”, Off My Trolley, January 10) reminded me of an enquiry I made a year ago regarding the cost of buying on credit.

Not only do shops charge a high interest rate (over 20%), they also levy additional charges. So, in the extreme case, you could even end up paying double the cash price, even if you comply with the repayment terms.

Even though that might include insurance, I think that’s exorbitant.

With an interest rate much higher than you can get on your investments, that should be ample compensation for the credit provider, without any additional charges. Or charge a lower interest rate.

If the woman in your article had paid 30 instalments of R289.60, then, in total, she must have paid R8 688. You can buy a fridge large enough for a single person for less than half that amount, so I’m guessing that her fridge was less than half that, and the remaining amount is interest and other charges.

So I think the supplier had received ample financial compensation for the sale.

She apparently also had a credit card. There seems to be a similar situation there. You can end up paying an exorbitant amount in interest, far more than you expect, if you don’t pay the amount owing in full.

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