Many people choose to buy clothes and other products from catalogues, so they can spread the cost over a number of payments. It might seem more affordable, but catalogues can be an expensive way to borrow.
If you’re struggling with catalogue debt, don’t worry, it’s important to remember you’re not alone. We’re here to help you find relief from debt stress.
What is catalogue credit?
Catalogue credit is a way of buying things, normally by post, and your payments are spread over weeks or months.
You can use your own paper catalogue, shop online or buy through an agent who is often a friend, neighbour or relative. The agent usually earns a commission on what they sell.
Catalogue credit is often called ‘mail order’ credit or a ‘shopping account’. One of the best-known catalogue companies is Littlewoods.
The cost of catalogue credit
Catalogue credit is sometimes interest-free, as long as you repay the cost of the item within a set period of time. This is usually between 3 and 12 months. If you don’t repay within this time, interest can build up quickly.
If you buy more expensive items, the catalogue company may charge interest over a longer time. Their interest rate tends to be quite high. It is a good idea to shop around to see if you can get the same products cheaper elsewhere.
Added extras you might not need
Catalogues might also offer insurance for products. This is sometimes called ‘shopping insurance’ and it promises to protect anything you buy. These policies can be expensive, and they don’t cover everything. You might not need the extra protection, for example, there might be a long guarantee on the product you are buying. Check the small print carefully.
Some catalogue companies are licensed as moneylenders with the Central Bank of Ireland.
This is because they charge more than 23% APR (Annual Percentage Rate). If the interest rate they are charging you is more than 23% APR, you have the same rights as you would in a moneylending agreement.
What to think about before you take out catalogue credit
Before you sign up to catalogue credit, ask yourself the following questions.
Do I really need the item and is worth taking out credit to pay for it?
If you really think about what you buy, it makes it easier to say ‘no’ to things.
Can I wait until I have enough money for the item?
Do I have the discipline to make the repayments on time and continue to cover my regular expenses?
Can I afford the interest charges if I don’t repay on time?
Can I buy the item cheaper elsewhere?
Can I borrow more cheaply elsewhere? If you can’t get the item for less, consider a cheaper form of credit.
Compare the pros and cons of catalogue debt
| You can spread the payments |
You can buy something you need and spread the payment over time to fit your budget.
|You need to pay on time |
You need discipline to make your payments on time and in line with the plan.
|Credit may be free |
Your credit is free as long as you make your payments on time during the interest-free period.
|Interest can be very high |
You might be tempted by the interest-free period but end up delaying your repayment. This could mean you end up paying a very high rate of interest. It could then cost you far more than the items were worth.
|May be better than moneylending |
It can be a more affordable way to pay for something than taking out a higher interest rate moneylending loan. This can be useful for necessary items like school uniforms.
|Credit history may be at risk |
It can be tempting to spend more than you need.
Interest builds up quickly after the interest–free period is over
You usually repay the item within a set period of time (between 3 and 12 months). If you don’t repay within this time, interest can build up quickly. You may also have to pay additional costs for:
- Late payments
- Missed payments
If you miss payments to a catalogue or don’t make the minimum payments, the company will ask you to catch up on the arrears.
You should treat catalogue debts as non-priority (secondary) debt. This means that you should pay more important debts first like:
- Household bills
- Living costs
Struggling to pay catalogue debts
If you’re falling behind with payments to a catalogue or you’re worried about what creditors can do, you need to take action. If you have just one debt, work out what you can afford to repay.
First of all, you should look at where your money is going and explore ways of increasing or making the most of it so you can make a realistic offer to pay. The easiest way to do this is to:
- Make a budget using our My Budget tool
- Contact your creditor
If you have other debts you need to repay you can visit our page about struggling with several debts and follow our 5-step tackling debt path.
If you get stuck along the way or want help with taking control of debt, contact MABS for free, confidential and non-judgmental advice and support from professional money advisers.