An interest-free deal or credit is where a supplier gives the consumer the option to purchase a product or service over a defined period with payments made being interest-free.

During 2012, 95,000 Australians took up an interest-free deal, of these 52% had an interest-free deal worth more than $2,500.

Due to the increased demand for interest-free deals, ASIC has released an online interest-free calculator. Click here to access the calculator.

For example, if a $2,700 dining set is purchased on an 18 month interest-free deal and the minimum monthly repayment of $100 is made, after the 18 month period ends, there will be a remaining balance of $900 subject to interest charges.

By using the interest-free calculator, consumers will be able to calculate the required monthly payments to ensure that the full amount will be paid within the interest-free period. In the above example, monthly repayments of $150 will ensure the $2,700 will be repaid within the interest-free period.

Other issues to consider before entering into an interest-free deal include:
Additional fees such as late or early repayments; and other payment options available such as lay-by or a debit card which may be cheaper to use.

Interest-free deal calculator

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