Christmas on the never-never

Christmas approaches and the demand for Barbie houses seems as buoyant as ever. The cheapest Barbie Dreamhouse is £250 from Argos. Littlewoods have it at £329. Why would anyone pay £79 more? Presumably because Littlewoods have the option to buy now and pay later.

Littlewoods are entirely transparent about what this means:

What is Buy Now Pay Later?
Buy Now Pay Later is an interest bearing option that allows you to delay payments on your purchases for up to 12 months. The delayed payment period starts from the date of order (including pre-ordered items and those not ready for immediate dispatch).

You can choose:
A delayed payment period of 12 months and then a repayment period of 104 weeks when you spend £50 or more.
A delayed payment period of 12 months and then a repayment period of 156 weeks when you spend £99 or more.

How interest is calculated?
Interest will be charged for the delayed payment period and the chosen repayment period.

Interest is calculated and compounded daily at a typical rate of 44.9% per annum for the delayed payment period and repayment period and is charged to your account at date of order as a lump sum. This calculation factors in the planned payments that are requested during the repayment period. Your interest rate is personal to you and will be detailed in checkout.

Buying things through weekly payments is nothing new. Many people will remember mail order catalogues.

Enterprising individuals would keep the catalogues, take the orders and collect the money; their reward would have been a small commission. The fact that their dealings would normally have been with family, friends and neighbours presumably ensured that defaults on payments were not common, but there must have been serious strains on friendships when payments fell into arrears.

The catalogues rarely had anything that might not have been bought in stores in a good-sized town and their prices probably were probably higher than the prices that might have been paid in the high street, the difference was that they allowed payments over months, twenty weeks, or forty weeks, or more.

In a high street store the only items that did not require an immediate payment were the sort of thing that one bought on hire purchase, televisions, washing machines and the like.

Hire purchase came with the threat of repossession if one did not keep up the payment of the instalments so, naturally, one could not have bought clothes, or many of the other things in the catalogues, on HP. The catalogues were successors to the door-to-door salesmen with their suitcases of clothes and household goods for which the repayments were collected week by week.

If one analysed the customers of the travelling salesmen and compared them with those who paid instalments on hire purchase, or mail order catalogues, and then compared both groups with those who might buy a Barbie dolls’ house through payments, the common thread would be the lack of access to other forms of credit.

Barbie houses are not essential, but there are other things that are, and the people least able to pay for anything are those who pay the highest prices.

It is an odd world that takes most from those who have the least.

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