I am in desperate need of a new laptop. I have some money coming in from tax, but am putting it towards a house deposit. So I am looking into interest free, no repayments for 18 months. Only looking to spend around $500-700 and would have it paid off before 18 months is up so no problems there. BUT I heard from someone that it's not good to have store credit cards (even if all paid up) if you are thinking of applying for a house loan in the near future.
Is this true? And who has done this interest free stuff?
FIL got a mac from Harvey Norman and he said they've been great. And he has the money, don't know why he went this way. I understand I will have to pay early repayment fees and if it was monthly repayments they put a 10% charge on late repayments. But if it's no repayments how do they sting you?
When you are going for a home line they look at all credit that you already have. Even if your card is at a zero balance they look at the potential that you could draw it down to its limit tomorrow. I was always advised to close down any additional credit cards when going for a home loan.
They sting you by way of monthly account keeping fees. I'm not sure of the exact amounts but it's something crazy and there is no payment method that avoids it in most cases
Banks don't seem to like store credit cards. The amount if interest they have the POTENTIAL to charge is what the banks will look at as your potential liability for the card - so even if you have a $700 laptop on i, if you are approved for something more (3k for instance) you will be seen by financial institutions as potentially owing that amount plus interest (generally speaking, as much as 23%).
In my experience, you are better off just buying the cheap laptop and putting the money into your home loan savings later.
We have bought a lot of our household items on interest free terms over the years and except for admin fees never paid extra.
You get stung if you haven't paid it in full by the time the interest free period ends. We often pay ours out early if we want to buy something else. We only ever have one thing at a time.
My best advice is to read the current terms and conditions and small print carefully and ask questions if you aren't sure. Unfortunately they do vary, and can catch unsuspecting people out.
The card is treated no different to any other credit card when applying for a mortgage. They are worried about the amount you could be in debt, so even if you have zero dollars owing and have a limit of $2k, it is classed as a $2k debt. So if that limit is going to be the make or break for a mortgage, then I would close the account before applying.
Also only apply if you are certain you will get it, as every time you apply for credit it goes on your record.
Yea monthly account fees, our fridge was extra $5 a month, plus more if repayments were with credit card not direct debit.
Ps while im here, just an fyi do NOT flexirent it either, even worse and in the middle of learning that the hard way...
Thanks everyone. What happens if I were to cancel the card after I pay in full? Can you do that or are you stuck with it forever?
To be honest I am looking at cheapies and will use some tax money when it comes. Plus I got $200 from family for my birthday
You do pay more for interest fee, it's true, however you do have the benefit of having what you need now and not having to wait.
I've had a few of these over the years and never had issue being successful in getting a loan. As long as you are smart and pay what you need (plus a little extra) to clear it in time. The big killer is if you go over the interest free time frame and then they slug you with huge interest. That's why I always pay a little extra just to be sure I am in front.
I recently did this through Harvey Norman, wish I'd looked into it better! We had just taken out a new home loan but needed a top up for renovations. We knew all figures we could borrow before we got the Interest free from Harvey Norman, got that little card and it brought our borrowing capacity down from an extra $50k to less that $10k (on top of our existing loan). I wouldn't do it again personally. We had to find the cash to pay out the interest free credit so that we could borrow money for the reno's. We also had problems getting them to send the first account so that we could actually pay it out in full!
Ive cancelled my card but think they send me stuff still offering to 'buy now pay later'.
They don't like the cards if you are applying for loans, they look at the total of the credit limit rather than what ever is on it, so you would want to pay it off and cancel if going for a loan. We recently got a fridge for 4 years interst free on sale, the price was about $100 more than the good guys and $2.95 a month account fee but we couldn't afford it upfront so am happy to pay a bit more and am hoping to pay it off quicker.
It's tempting and if it wasn't for some tax money coming back I wouldn't have a choice. I would pay it off in time and cancel the card if I do go this way. But just to save hassles sown the track I'm leaning towards cash. I'll just get something a little cheaper this time I guess.
And with cash you have bargaining power. Office works will beat the price of any major retailer by 5%.
You can also play one retailer off against another with written prices and see who can better the price.
We've saved $$$$ over the past few years doing this.
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