Please note that since this book was last published in 1997 some of the laws that have been referenced may have changed. We
are doing our best to update the articles, however, it is advisable that you to consult an attorney before relying on any information contained herein.
Many people cannot, or prefer not to, pay cash for their
larger purchases. For them, retailers offer different forms of
credit:
OPEN ACCOUNT You are obliged to pay for goods within 30
days of the date of the statement. How-ever, many stores do not
charge interest on overdue amounts and allow their customers to
pay off a large debt over several months. Other stores will allow
you a long period to pay - with a budget account - but may charge
interest.
DEFERRED PAYMENT With this type of account stores will
allow you to buy household equipment at the 'cash' price and to
pay the amount off over three to six months without interest.
REVOLVING CREDIT This is similar to deferred payment,
but any items can be bought up to a specified credit limit. Each
payment makes credit available to the same amount.
INSTALMENT PURCHASE Similar to deferred payment, but
interest is charged (and the payment may be over a longer
period). Usually you will take ownership only after the final
instalment.
CREDIT ACCOUNTS AND CHARGE CARDS Some stores offer
customers a credit card, or a charge card, which may be used for
purchases in that particular store. Charge cards are issued free,
offering the customer cash-free shopping, and at the same time,
discounts on future purchases, special offers and coupons. (See
also credit cards.)
You may be led into thinking that a store gives free credit
because it advertises the same prices for cash and credit. In
fact, however, the prices may have been raised to allow the
retailer a margin of safety to compensate for customers who
default on payments. Thus, if you pay cash in a store which sells
on credit, you may be able to press for a discount.
On the other hand, stores which do not sell goods on credit
often do not have built-in charges such as interest or an extra
margin to compensate for defaulters. Their prices therefore will
often be lower than stores which grant credit. (See bank accounts; credit agreements.)
