Interest-free shopping offers

We find interest-free deals can slug you with hefty fees.
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01 .Introduction


As shopping traps go, long-term payment deals are as bad as they get. They can cost you hundreds of dollars in fees alone, even if you pay everything off within the interest-free period.

This article examines:

For more information about shopping, see Shopping and legal.

CHOICE researched and shadow shopped some interest-free payment offers available with major retailers, and calculated:

  • Fees can range up to 87.6% of the minimum purchase price.
  • For example, a $549.95 Braun shaver could cost you close to $700 with a David Jones three-year, interest-free offer on its StoreCard and almost $1000 on the Amex David Jones card.

Counting the cost

  • About 1.3 million Australian consumers used GE Capital interest-free offers in the five years to 2011. 
  • While most paid off their purchase within the interest-free period, almost one in three paid interest. 
  • InterestFree_BubblesDepending on the product they used, the rates ranged up to almost 30%.

Take a look at our infographic, to find out how we calculated the real cost of these interest-free offers.

Misled at point of sale?

A CHOICE shadow shop of major retailers offering interest-free deals early November 2011 revealed a lack of proper disclosure. Salespeople in five of the six stores gave incomplete or wrong information about details such as:

  • interest rates 
  • fees
  • conditions

Retailers are exempt from some important licensing requirements imposed on the credit providers whose products they represent.

CHOICE thinks this loophole can cause consumers to be misinformed about the credit deals they are signing up for. For the full story, see our report.


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