ArnoldRimmer said:
So I guess I'll simply tell my electricity supplier that I would be foolish to pay my last year's electricity bill. I'd be paying for something long after its value is gone! ;)
You could just as well create a ridiculous imaginary scenario where paying a cheeseburger via a payment option CAN be beneficial to one's financial situation as well. For example, there's always the theoretical possibility to that you invest that 1 dollar very very clever and make much more than 100 dollars out of it in 2 years. But since we are talking about a concrete product anyway: please, tell me how exactly paying for an Xbox 360 via the E.F.A. plan could actually turn out to be financially beneficial after 2 years. I'm quite sure that whatever scenario you come up with, it will be rather constructed as well.
I chose a 1:1 copy of your argumentation to show that the very same argumentation can be adopted for a payment plan that is so ridiculous anyone instantly realizes, to prove that this argumentation is pointless without looking at the specifics of the actual contract. BTW, this reminds me of a funny story a mathematician recently told to explain some parts of what is going wrong in the present-day financial world ("system-relevant banks" etc.). He was invited by a bank that wondered if mathematics could somehow further increase their profits. He said: "Well, I have an offer for you that you might find very interesting: Give me 2 million dollars, and in case my investments are successful you will get 3 million dollars back, so a 50% increase in value." The bankers said: "Wow, a 50% increase a value?!?!? That is absolutely incredible!!! How on earth are you going to do that?" He said: "Easy: I'll take all the money, go straight to the roulette table in the casino and place it on red. If I'm lucky, I'll have 4 million dollars afterwards and can keep 1 million. If I'm unlucky, it's you who lost all the money." |
I never said it would be foolish to pay your bills, however paying them on credit would be foolish, because you're charged interest against that purchase. You'd be better off doing a direct (EFT) payment if you have the funds, but wiser still to pay monthly via EFT or check. How does one get away with not paying for electricity for an entire year or be forced to pay a year in advance?
You didn't elect to use a 1:1 analogy. You used an absurd analogy. The EFA plan offers consumers a low entry price of $100 at the cost of $38.74. That's incredibly cheap. If you purchased that same device on a credit card, you had fair to good credit (which means you're doing very well) and had a credit card with an APR od 20%, your monthly payments would work out to $15.30. If you repaid that purchase at that rate, at the end of four years (48 months) you'd end up paying $734.40.
Is a 9% simple interest rate better than 20% APR computed daily?
Is paying $38.74 better than $734.40 or more?
Again, not every person can afford to plunk down $300 or $360 to make a purchase. I remember when I was in my early teens and 20's and I certainly wasn't able to do that. For the person that can afford the cost of the console through the EFA and they can afford the monthly payment, you don't see this as a good deal for them? They should either pay fully, use a credit card, or buy it through rent-to-own services. This isn't a valid, affordable option? Is that what you're saying?
