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.
50 Responses to “The truth behind 0% interest promos”
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Pages: « 10 [9] 8 7 6 5 4 3 2 1 » Show All
May 25th, 2007 at 4:47 pm
i agree with the comments on DAO 10…i was in the mall on the day before DAO 10 was implemented. im looking for an appliance that i need and going around to see the best deal in the appliances store of the mall… then i noticed that some of the sales person are removing price tags and then they are erasing the the cash price… what was left was the card price… chat with one of them and asked what they were doing and told me they are complying with DTI regulations of only price per item… learned that the price will be effective the next day and if i will still buy in cash that day, i can still avail of the cash price…so what happen was i did bought the appliance that day because if I do it some other item, i will likely pay for it on its card price…
reflecting about what happen, i feel that DAO 10 is anti consumer especially for me because i dont like to use credit cards….
May 25th, 2007 at 4:32 pm
salve - yes, hidalgo is the “digcam place in the Quiapo area”. = ) there are reputable shops there like Henry, Mayer’s and they sell the real deal. price is way cheaper than mall prices.
May 24th, 2007 at 4:54 pm
hey luohan, are you talking of quiapo area? I have been wanting to go there for ages but im worried I will get fake stuff. someday, i want to feature cheap places to buy expensive stuff. =)
May 24th, 2007 at 1:35 pm
Gusto nyo magtipid… punta kayo Hidalgo for digital cameras, and stuff. Loko lang ang bumibili sa mall! Geez
May 18th, 2007 at 9:43 am
passed by the mall yesterday. just wanted to check for myself the recent practice of 0% promos.
Here’s what I gathered:
1. some still offer a special cash price but they don’t put it in the price tag
2. some offer the same price for cash and 0% price BUT cash buyers get a lot of free items (worth around 5 to 6% of the item price)
although, there really are some shops who already impute the surcharge to the price. (normally, shops belonging to industires that are not competing in price)
I actually had a discussion with a friend buying a digicam insisting on the 0% deal beacuse this particular store had the same price for cash and 0% installment (greedy store! my friend’s mindset is that all the stores are the same)…I told him to look for another shop that gives an option to pay for cash purchases at a lower price! = )