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Catalogue credit or shopping accounts

When you shop using a catalogue, you’ll normally be offered the option of spreading your payments over a period of time. This can make large purchases seem more affordable. But if you’re not able to regularly repay on time, catalogue credit can be an expensive way to borrow.

What is catalogue credit?

Catalogue credit is a way of buying goods, either by post or online, with payments being spread over weekly or monthly instalments. A typical repayment period might be one or two years.

You can either get your own catalogue or buy through an agent. The agent usually earns commission on what they sell.

Catalogue credit is often referred to as a ‘shopping account’ or ‘mail order account’.

People often refer to their credit purchase as being bought ‘on account’.

Well-known catalogue companies include:

  • Very
  • Next
  • Studio
  • Simply Be
  • Freemans
  • Littlewoods.
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How catalogue credit works

Most of the large catalogues offer credit.

Mail order or catalogue credit can sometimes be interest-free, as long as the cost of the item is repaid within a set period of time (usually between three and 12 months).

But if you don’t pay on time, interest can start mounting up quickly – and some catalogues charge interest from the date of purchase.

It’s important to check the terms and conditions carefully before you sign up.

The cost

While not as expensive as some forms of borrowing, catalogue credit isn’t cheap.

Here’s a comparison of longer-term catalogue credit against a credit card. The table is based on repaying £250 over two years (assuming no interest-free period).

Type of borrowing
Example APR
Monthly repayments
Total amount payable

Credit card

19%

£12.60

£302.0

Catalogue credit

30%

£13.98

£335.52

Extra costs

It’s important to be aware of extra costs for late or missed payments

What to think about before you take out catalogue credit

  • Do I really need the item? If it’s a luxury item, it might not be worth taking out credit to pay for something you don’t really need.
  • Can I wait until I have enough money to pay upfront for the item?
  • Can I buy the item more cheaply elsewhere? If it’s a branded item, you might be able buy a cheaper non-branded version somewhere else or even buy the same item second-hand through an auction or recycling site.
  • Can I borrow at lower cost elsewhere? If you can’t get the item at a lower price , consider a cheaper form of credit, such as a 0% credit card (as long as you’re sure you can pay it back in full before the 0% period ends).
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Pros and cons of using catalogue credit

Pros
  • If there’s an interest-free period and you can pay off your balance during this period, your credit is free.

  • It can be a more affordable way of paying for necessary items such as school uniforms than taking out a payday loan or using home credit.

Cons
  • You might be tempted by the interest-free period but end up delaying your repayment and paying a high rate of interest, costing you far more than the items are worth.

  • Missing a payment can affect your credit rating in the same way as missing a loan repayment or credit card payment.

  • If you’ve bought through an agent who is also a friend or neighbour, not being able to make repayments might put them and you in an awkward situation.

Alternatives to catalogue credit

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MoneyHelper is the new, easy way to get clear, free, impartial help for all your money and pension choices. Whatever your circumstances or plans, move forward with MoneyHelper.

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