Many young millennial consumers are shying away from credit cards as they have witnessed the consequences of recession and grew weary of buying stuff with money they don’t actually have. Fashion retailers took notice so they partnered with financial and tech startups to offer a solution to make it easier to facilitate credit and so they came up with Interest-Free-Payments (IFC).
Interest Free Credit (IFC) is “where a customer makes a purchase via a credit agreement and pays no interest on that loan for a fixed period of time. Giving someone the option to pay in fixed monthly installments at no extra cost”.
It might seem a good advantage for customers but fashion retailers are benefiting as well, according to a research made by Ikano bank (a company affiliated to IKEA) they found that 40% of customers make their decision to purchase based upon if IFC is offered. Not just that, they also found that customers spend three times the amount of those not purchasing using IFC. But I have to warn you interest charges by some providers will have to be paid after a period of time, so still, as a customer, you will have to be cautious and do calculations to make sure you pay on time before the interest is charged on your purchase.
Here are some of those Interest Free Payment Providers
Looking at the emergence of this new payment model, it reminded me of the old way of purchasing, which used to take place, and still do to this day, by many in some arab countries, known as “taking a note on the books” this is when you buy, let’s say from the supermarket or an apparel shop and pay later at zero interest, but this can happen only if the shop owner knows you and trusts you enough to sell you without receiving his payment immediately, but the free interest providers I mentioned earlier did it better, where the retailers are ensured to receive their payment, on the other hand, this might be a good way to encourage millennials to buy using credit cards again.