I'm also European, but buying furniture on credit is perfectly normal in my country - indeed, it would be quite unusual to buy any big-ticket item and not be offered credit terms, usually with an interest-free option.
Worst case, I move the cash to a 2% interest rate bank account and let it sit there. Best case, there are other investments I can make now with that capital, and end up paying less overall for whatever I was buying because having the money has made me money in some other way. Lucky case, the company bankrupts and I don't end up having to completely pay for the thing at all.
Being also European, it is rare to be offered interest-free financing, and when you are, is because you are already paying a premium and could find the stuff cheaper somewhere else. But occasionally, some shops do have the cheapest price and still offer interest-free rates. I always take it, and have no idea why I wouldn't do that.
Disagree. This severely complicates my economy.
Instead just having X funds less available, I still have the same funds at disposal, but have to remember I owe X to Y which must be paid by Z.
Even just once this makes the simple question “How much disposable funds do I have?” hard to answer.
More than once and I will need a system to manage my own personal economy. That’s horrible!
When asked for credit I always answer no, because the small savings of delayed payment does in no way make up for the extreme complexity it adds to day-to-day economics.
Play with the transfer amounts to suit your budget. This helps you not have to think about spending money, or if you have enough to pay rent that month.
Back to the furniture example from grandparent comment, I simply ensure that main has enough in it each month to cover the monthly expenses. HTH
Some online banks have virtual subaccounts, which let you 'hide' money from your main account, if that's the way you are tracking funds available.
> More than once and I will need a system to manage my own personal economy. That’s horrible!
You already have a system, and it sounds like it's 'ask the bank how much money I have'. In the not too distant past, checking accounts came with a checkbook that included a register for you to track your expenses, but I guess humanity has declined.
In fact, if you aren't buying on credit your finances are more complicated because you have to plan ahead make sure you've got future major expenses covered.
I'm fascinated by this. Where do you find these sky-high interest rates in banks?
Ally Bank, wealthfront etc.
The key is to make sure they're FDIC insured.
Make sure you go past the "featured" ones :-)
And it's perfectly okay for example if you just bought a new flat and you're broke as fuck, because you spent all your cash on must-repair stuff, like getting the plumbing in order, but you also fancy a new bed, because you have none, so interest free bed it is!
Of course if you barely make enough to live month-to-month, then it's unlikely you'll be able to pay the monthly installments of the loan. (And usually you'll be declined even the in store zero-interest loan too.)
Furthermore the shop pays some service fee to the loan provider, and thus they scrape by.
People in low income communities find it very normal to buy on credit, often allowing you to buy now, pay in a year. My friends from higher income communities think this is a strange thing to do.
What I'm trying to say is that some of these customs might not depend on country, but even on groups within countries.
On a related note, I've personally noticed that here in the Netherlands, there's a pretty clear split between low income and high income, very tightly connected with education. In 'High School', lower and higher education are split in different classes and often different schools. So friendships are often formed within these groups and not across them (sports begin the exception). Because of this, a lot of people think something is normal in the Netherlands, but it's actually normal in their environment.