A finance professional last week told me he had a great tip for MoneySmarts. He said the 0% interest rate promotions are a sham. Yep — a clever cover up, a daring deception, a trap for the millions of unsuspecting shoppers in this great big mall of a country.
Unfortunately, he declined to be identified, but he was willing to explain all the details. So MoneySmarts went money myth busting to find out if his claims were for real.
Hot glue gun stuck to the end of my nose! I was surprised how easy it is to make money in this country. Here is what I found.
If you are like me, you go shopping at least once a week. Or at least go window shopping. You find that as you browse the shop windows, your eyes constantly stray to digital cameras (the hot craze right now), laptops (I especially like the razor-thin ones because I’m hardly 5 feet tall and lugging around more than two kilos of computer equipment is not my idea of a good day), plasma television and aircondition units because of this terrible summer heat.
These are by no means cheap items. But hey! There’s a 0% interest installment promo and all my three credit cards are accepted!
Now, here’s the deal. Swiping a credit card removes the pain of having to fork over a huge amount of money and it is very convenient. But we have been told hundreds of times not to use the credit card just to look good because the interest will kill us. Well this time, there’s no interest to pay. So why not jump at the chance, right? Sounds like a great deal.
Wrong.
The Canon 400D camera cost P48,500. Its interest free if you pay for 12 months. The monthly payment is P4,042. Cut down to monthly bite-sized pieces, it doesn’t look too painful. Then I asked the clerk, “What if I don’t want to pay by credit card? I want to pay in cash.”
“Mam, its P44,950 if you want to pay in cash,” she says.
Technically, there’s no violation of Administrative Order 10 issued by the Department of Trade and Industry, which put a stop to the practice of putting a card price and cash price in one price tag. But if you pester the clerk in a nice manner, he will tell you that he can give you a discount if you will pay in cash.
So, is the 0% interest for real? MoneySmarts concludes the nice round “oh” is just a figure, often in red, to catch people’s attention. The interest has been included in the price already. If I pay P4,042 a month for that Canon 400D, I will be paying 12% interest on this installment promo and not 0%. If I pay in cash, I would save P3,550 – that’s almost 2 gigabytes of additional memory for the camera.
If your aircondition unit at home is up for replacement, then go for the deal because the 12% interest is much less than the regular 42%. But don’t let the deciding factor be the attractive “0%” deal, because it ain’t what most people think it is.
December 16th, 2008 at 5:41 pm
well, isn’t obvious? the bank needs to make money too. normally, they charge the shop 3.5% for straight payment, 6% for six months zero, and 12% for twelve for deferred or zero percent.
if you have cash, always ask for a cash price. however, there are some items that are really have zero percent. meaning its not the retailer who would shoulder the interest but rather the vendor of the product.
November 25th, 2008 at 8:09 pm
[...] can avail of any Nokia phone under 0% interest all year round! [warning] Although there really is some form of mark up when it comes to 0% interest, it still makes it easy for anyone to buy a Nokia phone if [...]
July 31st, 2007 at 11:22 am
[...] to my credit card, that’s only P11,000 something a month at “0%” interest (yeah, yeah) and P370 per day [...]
May 27th, 2007 at 8:53 am
I got my digicam from quiapo, with a 1 year warranty, mas mura ng mga 7k sa malls, sana may ganung supplier din para sa HDTV, lower price compared sa mall pero with warranty
May 25th, 2007 at 10:58 pm
Yes. Hidalgo’s in Quiapo. Stores there offer 1 yr warranty. If you want less hassle, some are also selling in ebay.ph, around 2k difference, still way cheaper than those in the malls.
For apple and palm products, there’s another seller who sells them close to the SRP, and with original Apple receipt honored by Apple center here.