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?

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.

1. Jose says:

I'm pretty sure Standard Chartered would not get away with this in the US.

Banks are scams.

2. Murray says:

Yes, Jose, they are.

And with the kind of advertising you see above, it is no wonder there is an economic crisis on right now. A whole lot of people got duped into taking out loans that they could never afford. In the current case, it was for housing loans, but there will be huge knock-on effects on credit card debt during the course of 2008.

Be careful what you sign...

3. The Most Random Guy says:

A very good analysis of a very deceptive ad. Why is it that major credit card companies can get away with such sleazy practices while we come down so hard on other industries?

4. Credit cards and maths « garysmathsblog says:

[...] Misleading Credit Card Advertising. This ad advertises “a attractive interest rate of 5% p.a.” (p.a. means per annum or yearly interest rate), but has a “small” administration fee of 6%. [...]

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