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Media Release Wednesday 9 December 1998 “Interest-free” offers and the hidden cost of mobile phones can be New Years nightmare for Christmas shoppers “Interest-free” deals offered by shops can be costly, said the NSW Legal Aid Commission today. The Legal Aid Commission assists over thirty thousand people a year with civil law problems, many of whom have serious credit and debt problems. Conrad Gray, a solicitor with the Legal Aid Commission’s Consumer Protection Unit, said “ ‘Buy now pay later’ schemes or interest-free offers can be good value if they are managed properly. But there are hidden traps in these offers which many people, especially at Christmas time, do not discover until it is too late.” The Legal Aid Commission helps many people each year who have been burnt by “interest free” offers: · an “interest-free” offer often means signing a loan contract with a finance company. If the loan has not been paid within the interest free period the finance company may pressure consumers to refinance the loan. Although this may seem a good idea at the time, many consumers later discover that the new loan has an interest rate as high as 29%. · some “interest-free” loans are interest-free only if the whole amount of the loan is paid off in the time specified. If longer than the time set is taken to pay off the loan, interest is often calculated from the day when the goods were purchased. Further, many people do not realise that if they only make minimum monthly payments they will not repay the loan in the interest-free time. Mobile phone deals are also catching out many consumers, said the Legal Aid Commission. Many consumers are attracted by advertisments offering mobile phones for extraordinarily low prices - sometimes as low as $1. However, these deals have hidden features: · consumers are asked to sign a contract which requires them to pay a monthly connection fee for a minimum period of up to two years. Even if you never use the phone you can still have to pay as much as $1,000 over that time. · the cost of calls on these deals is often more expensive than other mobile phone plans. · consumers are often sold insurance relating to the phones which is overpriced and rarely pays up. Some companies explain these features, many don’t. Contacts: Conrad Gray (02) 9219 5817 Christian Mikula (02) 9219 5817 |
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