Don’t Fall For Interest Free Smartphone Offers by Banking Institutions

Don’t Fall For Interest Free Smartphone Offers by Banking Institutions

                A big majority of the Pakistani public holds an account in one or more banks. Naturally, many of the bank customers also often get credit cards from the same banks.

Irrespective of whether you have a credit card or not, banks usually keep sending you some pretty “insane” offers where you can get the smartphone (or any other gadget) of your choice at 0% markup if you pay back within a fixed amount of time – usually 3 to 6 months.

While it may seem like a pretty good deal for you to buy your favorite handset on installments without paying any interest on it, it is actually a deceiving tactic employed by almost all banking institutions.

Lets take a look whats going on here.

Banks Charging Extra? Or Providing A Service?

While the banks claim that they do not charge you anything extra and you even get to payback in installments without any markup, there’s a high probability that they are misleading you.

For starters, most banks often have a transaction fee ranging from Rs. 1,000 to 3,000 you have to pay before you start on an installment plan.

But that’s the small part, the major part where they rip you off is with regards to the actual price of a product they offer, in this case a handset that you are set on buying on installments.

Protip: Whenever you get a flyer in your mail, find an installment plan shared on social media or read a news article about some new installment offer, just compare the bank’s price of the handset to the normal market price.

It is common sense but you’d be surprised how many people just don’t check up on prices.

Banks can charge as high as 150% of the normal market rates. It’s unfortunate the unknowing banking customers are tricked using such tactics. Rarely can you find an actual market price with such installment plans. On the other hand, banks which do not have the 0% markup options, employ similar tricks as well.

Some Recent Examples

Let us give you some examples here:

Bank Alfalah has a Step-by-Step (SBS) Installment plan which allows you to pay with 0% markup if you opt for 3 or 6 month installment plans. Take a look at one of their offerings below