Misleading credit card advertising
By Murray Bourne, 04 Jun 2007
This flyer arrived in my mailbox recently, from Standard Chartered Bank.
Click image to see full size scan.
It is certainly pushing the envelope when it comes to ethical advertising.
This is especially galling:
Now you can own anything, any time, anywhere... You can shop for designer brands or indulge in a holiday with ease.
Really? And when and where do I need to pay for it? No time? No where?
Now the really misleading bit:
Every purchase above $100 will automatically be converted into 24 monthly instalments at an attractive interest rate of 5% p.a. along with a small administration fee.
That "small" administrative fee is actually 6%. In the small print:
The effective interest rate is 9.32% p.a.
What? This is a lot more than an "attractive 5%"!
The offer of $100 rebate also sounds good. From the fine print:
To qualify for the $100 cash rebate, you must spend a minimum transaction amount of $500 within one month of receiving your card.
So $500 at 9.32% for 2 years, that's $93.20 in interest that you have to pay the bank. So you are really only getting a $6.80 rebate. Hmmm... And if you spend over $500, that rebate is capped at $100.
This advertising is very dangerous. The majority of the population do not bother to work out the real interest they are paying on credit cards.
Do yourself a favour. Do not take up this offer.
Check out more on the math of Credit Cards.
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