How to avoid catalogue rip-offs
There was a time when many of us shopped via catalogues, with most households possessing a Next Directory, Argos or Index catalogue. But these days most of us have made the switch to internet shopping and online sales overtook catalogue sales as far back as 2004.
Surprisingly, catalogue companies are still here (although many offer internet shopping, too) and they are very eager for you to buy from them. So eager, they will offer all sorts of incentives but which should you grab and which should you avoid at all costs? Read on to discover the scams, rip-offs and bargains of the modern catalogue world.
Watch out for rip-offs
If you are looking to buy something via a catalogue company, shop around first. Some of them have extortionate mark-ups on products. For example, Freemans is offering an Apple iPad Air with Wifi and 16GB of memory for £470. Buy it directly from Apple, or Argos, and it will cost £151 less at £319. Similarly, Next is selling Converse Chuck Taylor All Star Ox trainers at £47, the same shoes are £34.99 from Foot Locker.
So don't buy anything from a catalogue without checking whether you can get it cheaper elsewhere first. You could save yourself a fortune. Also, keep an eye on postage costs - always factor those in when comparing prices.
Catalogues aren't always the most expensive option, though. Some offer fantastic, low-price deals. Kaleidoscope, for example, is offering almost identical rugs to John Lewis – at a fraction of the price. In John Lewis, 'Jelly Bean' rugs sell for £170 or £250, depending on size. The same rugs (available in slightly different sizes) at Kaleidoscope cost £120 and £199 each – plus canny shoppers can also find voucher codes for Kaleidoscope, such as 20% off with free delivery.
It's always worth checking whether you can pick up a bargain in a catalogue but shop around and you'll protect yourself from rip-offs and increase your chances of picking up a steal.
Never 'buy now, pay later'
If you do find something you want to buy at a good price in a catalogue, don't get caught at the final hurdle by taking up the credit deals offered. Many of them list a weekly price next to the standard cost for buying something.
At first glance this can be really appealing. You could get your hands on that Apple iPad we mentioned earlier for just £4.62 a week with Freemans - but you'll be paying that for three years (longer than you'll probably have the iPad) and in total you'll pay £400 more than if you'd bought it from Apple. That's because the iPad was more expensive at Freemans in the first place plus they charge 34.9% APR if you pay weekly.
Similarly, many catalogue companies allow you to buy things on account. This means you don't have to pay upfront but can clear your bill with monthly payments.
For example, Very encourages its shoppers to 'spread the cost': "Your Very Account is your own flexible friend. If your monthly budget is looking less healthy than a dose of man flu, just pay the minimum amount and free up your cash for other stuff."
What it doesn't want to tell you (it's in small print on a different web page) is that you'll pay around 39.9% APR for that credit. If you have a poor credit rating, the interest rate could be even higher.
Catalogue debt hell
Thousands of people have taken catalogue firms up on their 'buy now, pay later', or 'spread the cost', offers and are now paying a hefty price for it. In the first six months of this year alone, National Debtline helped 11,563 people who were struggling with catalogue debts. More people came to the helpline with worries about repaying catalogue bills than for mortgage arrears or payday loans.
"Many people do not think of 'buy now, pay later' deals in shopping catalogues as a form of credit but that's exactly what they are," says Jane Tully, head of insight and engagement at the Money Advice Trust, the charity that runs the National Debtline. "Goods ordered from a catalogue belong to you and cannot be taken back if you do not meet your payments – but the debt is still enforceable in the courts like any other consumer credit agreement."
The interest rate on catalogue credit is extortionate with 39% APR the norm for many companies. Spend £300 on that rate of interest, repay it over two years and you'll pay almost £140 in interest on top of what you borrowed in the first place.
"If you find yourself struggling to cope with your catalogue payments, the best thing you can do is seek free advice from a charity-run service like National Debtline as soon as possible," says Tully. You can contact the helpline on 0808 808 400 or by visiting nationaldebtline.org. Alternatively, your local Citizen's Advice Bureau will be able to help you. You can find your nearest branch at citizensadvice.org.uk.
Spread the cost with a credit card
If you do want to buy something and you can't afford the upfront cost, consider using a 0% purchase credit card instead. These allow you to buy items and then spread the repayments over a number of months without accruing any interest charges. A war between the credit card companies means there are some great deals out there, even if you have a poor credit rating.
The Halifax Purchase Credit Card offers 0% interest on spending for 20 months. Alternatively, if you have a limited or poor credit history, then the Barclaycard Initial is designed for you and offers 0% interest on purchases for the first three months. Just make sure you don't end up being charged interest on that card as it has an APR of 34.9%.
Protect your credit rating
Many catalogue shoppers don't realise that their spending can also affect their credit rating. Because you don't pay for goods upfront in many cases (you pay a monthly bill instead), the catalogue firm has entered into a credit agreement with you. So if you miss a payment or are late repaying, it could be marked on your credit history. This will then affect your ability to borrow in the future.
Don't let your shopping habits affect your credit rating by making sure you repay anything you owe on time, or avoid entering into a credit agreement by only shopping at places where you pay in full at the time of purchase.
Be alert for scams
While there are plenty of retailers out there offering genuine goods in return for - sometimes expensive - payments, there are other catalogue firms that are simply operating scams.
These catalogues appear through your letterbox and promise all sorts of prizes from holidays to cash if you buy things from them. The problem is people spend a fortune in order to get prizes they never receive.
"We are inundated with reports of victims who have fallen prey to catalogue scams," says a spokesperson for Thinkjessica.com, a charity set up to raise awareness of mail order scams and help people who have fallen into their trap. "Victims have spent thousands of pounds on overpriced food, chocolate, beauty products, clothes, etc, and never receive a prize. There are so many of these scams about that we now advise people not to buy goods to claim a free prize."
You can find out more about catalogue scams and how to avoid them at Thinkjessica.com or for a free booklet, send a stamped, addressed envelope to: Think Jessica, PO Box 4442, Chesterfield, S44 9AS.
Also known as discount codes, promotional vouchers or promotional codes, online coupons or discount vouchers, are codes that can be entered at the checkout of many online UK retailers that gives you a discount against the item/s you are purchasing. The codes are generated by retailers and sent to certain members of the public to encourage sales.
Short-term cash loans designed to be borrowed mid-way through the month to tide the borrower over until they next get paid, whereupon the loan is settled. Generally used by people with bad credit ratings and/or no access to short-term credit such as an overdraft or credit card. Like logbook loans, this type of borrowing is hugely expensive: the average APR on payday loans is well over 1,000% and in some instances can be considerably more.
“Arrears” tend to be associated with debt. If you fall behind and miss payments on any outstanding debt, the amount you failed to pay is an arrear – the amount accrued from the date on which the first missed payment was due.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.