Credit card or finance?

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R.Y.K. LEE

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Hello,

I am currently looking at 2 sites, both selling the same item. One does finance, the other one doesn't. If I pay for it using a credit card, will that essentially be like paying off the item through the same method as paying on finance?

I've never paid for anything on finance or credit card installments so it's all new to me. Any help or advice would be great. Thank you.
 
depends on the % of interest on the finance agreement and the interest rate on the credit card.

The best case would be an 0% interest credit card for 12months and then pay that off. Hopefully said card also have perks like airmiles.

Worst way is put it on credit card and only pay minimum amount and you are putting 20% interest on top of it.
 
As @Raymond Lind says. It is about the interest you must pay before you are fully paid up.
You need to do the sums.

Borrowing is always the expensive way.

There is almost always someone offering Zero interest for a year. If you are certain you will have the cash to pay it off within that time that is the way to go..

Credit cards are the sure fire way to be in constant debt. if you can not afford to pay for it now, how to you expect to be able to pay for it Plus 20% later?
Most lenders charge exorbitant interest.
 
The only time to use a credit card is if you can pay it all off when the payment is due so you get the benefit of 6-7 weeks interest free-if you can't do that then do not use the card.
The interest free option is fine if you meet the criteria and can afford the monthly payments and it is offered on what you want
Alternatively look for a good used / grey item and either pay cash or get a bank loan.
 
If you only have one credit card and you use this for routine purchases and pay in full each month then do not use it for this item, as you will be paying interest on everything. If you have several cards this is not an issue but as others have said check the interest rates. Whatever you select make sure you can afford the repayment(s).
 
If you use PayPal, see if you can get PayPal credit (and if the site accepts it of course), it’s usually interest free for a certain period of time, or you can set up monthly instalments interest free for a set period.
 
Credit cards simply give you the chance to buy things across a 30 day period (between statements) and then effectively send you a total bill which you can choose to pay immediately in full or pay off part of it at which point you will be charged interest at around 20%. Generally if your statement date is the 10th of the months you will need to pay by the end of that month.
I pay for most things on a credit card and then have it automatically paid in full.

Finance will take the cost of the purchase add on the interest rate for the chosen repayment period and then divide it by the repayment period e.g 12 months to give you 12 equal payments. Finance is effectively a loan and you will make payments to a third party who will pay the shop the full amount at the start of the finance period - the shop doesnt get monthly payments.
0% finance will mean that you will not pay any interest for the period of the Finance. You may find that the item costs slightly more or you might get a discount if you paid cash/card.
My current camera is on 0% finance purely because i can afford the repayments monthly and keep the cash in the savings account and I couldnt get it any cheaper regardless of how I paid.

Which retailer is offering finance? I would want to know who is supplying the finance

Wex do 0% on selected cameras/lenses and are a reputable company who use Barclays for the finance
 
Thanks for the replies everyone.

I was looking at the Fuji X-E3 with the 23mm f/2.

PC world does finance but at 24.9% John Lewis allows you to pay with PayPal credit which is 0% for the first 4 months, then 19.9% I think. Castle camera does finance too at 15.9%

I can put down a deposit of up to 50% of the price, and pay the rest on finance. Probably 24 month term.
 
R.Y.K. LEE said:
Thanks for the replies everyone.

I was looking at the Fuji X-E3 with the 23mm f/2.

PC world does finance but at 24.9% John Lewis allows you to pay with PayPal credit which is 0% for the first 4 months, then 19.9% I think. Castle camera does finance too at 15.9%

I can put down a deposit of up to 50% of the price, and pay the rest on finance. Probably 24 month term.
Click to expand...

Check your bank to see if they will do a personal loan it will probably cost rather less.
 
If you have a hunt around you may be able to get a 12 months interest free credit deal somewhere.
 
There are many ways to get credit and not pay interest over time. Some can work to your advantage but you need to know what you are doing. Doing it wrong and not sticking to the plan will end up in a endless cycle of debt. Do it right and you might even gaming the system and be better off than just paying by cash.

For example, say you want buy something for £1000. You have the cash.

You could

1 - By with cash or Debit card and have the item and that is job done.

Or….

2 - Pay with credit card, and pay it off when the statement arrives. The advantages are

A - No interest because you are paying it off ASAP
B - You get Credit cover, sometimes accidental cover
C - You get more consumer protection as it is technically not your money. So any dispute the credit card company will deal with it. By law everything over £100 will be. When you buy a car for £10,000. Put £100 on the credit card, and if the car goes really wrong, you have this same protection.
D - You get any credit card benefit, such as Amex points which can transfer to shopping or air miles, free flights, free hotel stays etc.
E - Cash back from credit card.
F - other perks of having a credit card such as - lounge access at airports, free hotel upgrades, travel protection etc etc.
G - Not to mention if your card information is cloned, you are protected. It is not your money.

If you don’t have the cash then.

3 - Pay via interest free loan from the retailer.

4 - Get a new credit card with a 12-18month interest free period and spread the payment over that.

Option 3 and 4 you have to be really careful and discipline to pay it off on time and on schedule or it will cost you a lot more than what you think you signed up for.

The best option is Option 2, this is where the rich gets richer. This is where the game of credits and credit cards comes in. People like The Points Guy, scheme such as AVIOS, cards such as Amex Platinum can be HUGELY beneficial if you are in a position to take advantage of the perks. For example the Amex Platinum (actually a charge card) allows members entry into over 1300 lounges and centurion lounges at airports world wide where it will have free food, free alcohol, massages, showers etc. It does cost around £600 a year but if you travel frequently for work, say every week. This is easily offset with meals and refreshments within the first couple of months. On top of which you will be accumulating points for air miles.

These people you see travel in Business and First Class, some of them don’t actually pay for it (not directly), it is all done via points earned and then redeemed.

Personally I have never taken any finance options through the retailer, not even buying a car, the best way is the save up and buy it through with a credit card. Then you get all the perks, no debt. That said, I do have some credit card bills, but they are interest free and set up DD to pay them off on time, while my money is in my account collecting a bit more interest, small that it is.
 
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R.Y.K. LEE said:
Thanks for the replies everyone.

I was looking at the Fuji X-E3 with the 23mm f/2.

PC world does finance but at 24.9% John Lewis allows you to pay with PayPal credit which is 0% for the first 4 months, then 19.9% I think. Castle camera does finance too at 15.9%

I can put down a deposit of up to 50% of the price, and pay the rest on finance. Probably 24 month term.
Click to expand...

Its just down to how much you pay in interest over the term of the borrowing, basically whichever one means you pay less interest overall.

Unless you have poor credit, 24.9% is criminal and there are far better options usually.

Unless you can get 0% finance for the whole term, the next best option would be a 0% interest credit card and pay it back before the term ends.

I prefer 0% finance to credit cards as its a fixed monthly amount and there is no 'putting off' paying it like you could with a credit card, you have to pay the finance each month or you default vs a credit card where you could vary what you pay off and end up not clearing it before the interest free is up.

My Advice

If you are confident your credit is ok, get a 0% credit card if there is no option to do 0% finance for a full 24 month term.
 
Wex have the body for £599 thats same as PC world and the lens for £399 and will do 0% finance. I would give them a call and direct them to the PC world price and see what they can do.
PC World at £799 plus the 24.9% interest is going to be in the same overall cost. You might save £100 on the price but pay an extra £200 on interest
 
Wilkinson Cameras has this camera and lens for £659 after cash back. They do not seem to provide cheap finance so perhaps pay 50/60 % cash and arrange a loan/credit card for the balance. Will depend on your credit rating. Make sure you can keep to the terms otherwise you will be stung for penalties.
 
Thanks again for the replies.

I have looked in to the PayPal option and have been approved for it.

0% for first 4 months on items over £99 and then 19.9% APR after.

I may have secured a 35mm f/2 for £250. They are doing the X-T20 for £409 after £90 cashback. After paying off half of it immediately, I'll have about another £350 to pay off in installments.

My maths isn't brilliant, but from what I can understand, interest of 19.9% on the £350 should work out to be £69.65 per year (19p per day?). So should be about £140 interest over 24 month period?

So would it be 350+140÷24=£20.42 per month?
 
I have worked around credit in the past and pay a keen interest in it still, at the moment debt is very cheap and accessible my most recent credit card application got me a Barclaycard with credit more double what I needed for my plans, and 36 months 0% balance transfer offer, which actually just because I can I’ll clear in full in about 24 months

The key in your decision needs to be how long you want to spread the payments, and any initial and standing interest rates, it seems most shops offering credit off 12 months at 0% but I’ve never looked at this much if I’m honest so I don’t know about arrangement fees down this route, however if you go for credit card BT offer you’ll get a longer off very easily but they are subject to an initial fee 3-4% in the majority of cases

However recently I’ve noticed a few offering same period of 0% on purchases but as I’m not currently in the market for more credit I’ve not picked the small print apart

Of course all this is subject to your credit status too, personally I’ve spent time making sure my score is well over average

Honestly though the biggest thing is plan ahead so you can clear it faster than it needs to be cleared that way you always have room to slow up payments if a need is there and still not go outside of any deal
 
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