Money for beginnes: Yes, you can buy, but at a huge price

10:06am Friday 7th November 2008

DO you want to pay just £99 for a Nintendo DS – or would you rather pay £200? Or maybe even £363?

You might not have a choice. It all depends on where you shop. And how rich you are.

It is a sad and ironic fact that the richer you are, the easier it is to get cheap deals. With ready money or a cheap credit card, you can shop where you like and get the best bargains.

But those who really need credit end up paying way over the odds. Which, of course, makes them even poorer.

No it’s not fair. But it’s business.

One of the fastest growing chains in the High Street at the moment is Brighthouse, which specialises in offering credit for people on low incomes.

It’s owned by a finance company.

They don’t do credit checks.

They let you pay weekly. And for customers who can’t get credit anywhere else, they provide a real service.

But at a huge price.

Brighthouse typical credit costs 29.9 per cent, which is nearly double what you’d pay on an average credit card.

But that’s only the start of it. Because Brighthouse prices are also consistently higher than you can get elsewhere.

For instance, take that Nintendo DS Lite. A quick search on the internet shows you can get it at many High Street stores – Tesco, Argos, Comet, John Lewis, PC World, for around £99 or less.

Yet at Brighthouse, it will cost you £208.25 before you pay the credit charges. Once you’ve paid your £4.54 a week every week for a year, you will have paid £236.08. Add in the optional service charge and it costs £363.48. For that amount you could buy nearly four Nintendo DS Lites on the High Street.

A Hotpoint 8kg Aqualtis 1600 washing machine is £759 at Brighthouse – £527.74 plus the cost of the credit. You can buy the exact same model elsewhere for less than £400.

Shop at Brighthouse and similar stores and you pay twice over – once for the higher initial cost and then again for the very expensive credit.

And yes, sometimes it is the only option. And yes, sometimes it is the only way to get essentials.

BUT before you go there explore other ways of doing things. You might not qualify for the cheapest loans on the high street, but you might be able to borrow at cheaper rates that Brighthouse credit – then armed with a loan you can go and buy what you want at a cheaper price from another store and save yourself a small fortune.

Or try a local credit union, who might be able to help you buy essentials.

Remember – the service cover is optional. You don’t have to buy it.

You have a manufacture’s guarantee for a year anyway. And many will extend that for far less than stores charge. Companies make a lot of money from that insurance cover so staff will be very keen to sign you up – for their benefit rather then yours.

But the biggest question of all when you are tempted in to such stores and such arrangements is to ask yourself if you really need the stuff in the first place – even when it comes to the kids’ Christmas presents.

Of course we all want our children to have everything that their friends have. We want to give them what we can, even if it means paying over the odds.

But what you borrow so blithely now, will have to be repaid over the next year, or two, or even three. Less money to spend every week, as well as the added burden of debt and worry for the whole family.

Of course your children want gadgets for Christmas. But even more than that what they also want for the rest of the year is a happy family, one not worried sick about debt.

So before you sign up, just stop for a moment. At the very least, be sure you know exactly when you’re letting yourself in for.