Catalogue Accounts Adding To Financial Strain

by Caleb James on 4 Oct, 2012

With the financial squeeze putting pressure on family finances all around the country, it can be difficult to scrape together enough cash to pay for things such as furniture, clothes and shoes.

And whilst credit such as payday loans is continuing to explode in popularity, there are other tried and tested ways of paying for goods which remain popular.

Home shopping using catalogues has been around for decades and offers a way of buying goods and spreading the cost over a number of weeks.

However, whilst it is undeniably convenient, it can be difficult to track down bargains compared to high street offers and goods can end up being far more expensive, especially once interest is added.

As well as the opportunity to spread out the payments, catalogue shopping often attracts customers with deals allowing them to delay the first instalment. This can be very attractive for those struggling to find enough cash to survive as it provides breathing space for finances to improve. Unfortunately, if there is no change in circumstances, once the instalments fall due, it can come as a shock as the credit agreement can easily be forgotten once the goods arrive.

Consumer credit agreement – enforceable by court action

Many catalogue customers do not fully realise that opting to spread out the costs means agreeing to a consumer credit agreement, which is enforceable by court action if the conditions are not met. And with interest rates of up to 40% in some cases, the amount owing can become very significant.

Charities have warned that catalogue debts are becoming a growing problem for many consumers, with an increasing number of calls to helplines focussing on the subject.

The Money Advice Trust released statistics revealing that it received more than 25,000 calls regarding catalogue debts last year, the highest number it has experienced in the 25 years it has been operating. The charity said that catalogue debts are now the fifth largest problem that its callers are experiencing, with only credit cards, council tax, bank overdrafts and loans and energy bill debts more of an issue.

The charity said it had already received 7,000 calls in the first three months of 2012 regarding catalogue debts, which if it continues at the same rate, will mean even the sky-high total of 2011 will be eclipsed. The group said that many callers were prioritising paying their catalogue bill ahead of essential living expenses such as rent, which was frequently the reason for the request for help.

Failing to meet the minimum payments could result in any special offer being invalidated, slapping customers with much higher interest levels than they had bargained for. And with many companies also adding fees for sending arrears letters, making phone calls or simply a fine for being late, it is little wonder that the debts can quickly rack up.

Catalogue debts are currently a bigger problem that some of the more topical subjects such as payday loans, with almost 100 people every day telephoning because of difficulties.

Despite the problems that unpaid catalogue debts can cause, it doesn’t mean that they are always a bad idea. Catalogues in many cases offer a way to lessen the blow of a big expense and many offer an interest-free option.

However, it is important that you don’t take on more debts that you can afford to repay, as this will create a downward spiral which is difficult to escape.

Dealing with catalogue account debts

If you are struggling to manage your unsecured debts including catalogue accounts, store cards, credit cards and overdrafts, it may be a good idea to seek professional help from a debt management company, such as Baines and Ernst.

They offer services such as Debt Management Plans that could help you lower monthly repayments and clear debts at a rate you can afford.

So if you’re finding it harder and harder to keep up with debt repayments and your finances are feeling a little out of control, a Debt Management Plan could give you the breathing space you need to get back on your feet again.

You will also find that professional debt management companies will negotiate with your creditors and maintain communication with them – which will also help to remove pressure of dealing with your debts.

About the Author

Caleb James

Caleb James is a financial advisor and journalist, who contributes regularly to financial blogs and industry publications.