In physical and online stores, you are increasingly offered to pay on credit.
At the same time, the consumer debt on which Norwegians pay interest has increased every month since last summer.
An example from Ikea shows that the company’s Ikano bank requires an effective interest rate of 34 percent if you want to pay over NOK 5,000 in nine months.
The example came up as a payment suggestion when NRK was shopping at an Ikea online store.
Relatively small amounts that must be paid back over a short period of time result in a higher effective interest rate. The effective interest rate shows the cost of the loan in reality. The photo was taken from an offer NRK received in the Ikea online store when an amount of around NOK 5,000 had to be paid at checkout. Ikea’s Ikano Bank was behind the show.
Photo: NRK
The Consumer Council warns families against entering into such agreements because the cost is too high.
– These are expensive debts, debts that we must pay first if we already have them. If we don’t have it, we should avoid it, says Jorge Jensen, specialist director at the Consumer Council.
Subject Manager Jorge Jensen at Consumer Council.
Photo: Stig Jaarvik/no
– You should avoid
Because trading with money that you do not have is expensive.
– If you understand the numbers, it’s easy to see that it costs a lot, says Jensen.
And figures from Finanportalen show that small amounts repaid over a relatively short period of time can have very high effective interest rates, up to several hundred percent.
Customer manager Petra Hagen at Ikea says that few of her customers take advantage of offers to pay smaller amounts in monthly instalments – and that the company offers different forms of payment solutions.
Petra Hagen is the Customer Manager for Ikea Norway. She says the company doesn’t feel like more people are now shopping on credit than before.
Borrowing for purchases from Ikea is more popular for large purchases, such as a new kitchen. In this case, the loan term is often longer and the interest rate is much lower.
– For some, an interest rate of 30 percent will, of course, be too expensive, and some will certainly not consider such an offer. We wouldn’t encourage anyone to take out a loan to shop with us and end up in a difficult situation financially, says Hagen.
Policy rate in percentage
The policy rate is set eight times a year by the Bank of Norway. The policy interest rate controls interest rates at banks, and affects your housing costs. The goal of raising the interest rate is to bring high prices down again.
Forecasts tell us how Norges Bank thinks interest rates will develop in the future.
Read more about resources and reservations here.
A higher interest rate means higher expenses if you have a mortgage
Consumer debt is increasing after several years of decline
Consumer debt with interest has fallen steadily for the two-and-a-half years through last summer, according to figures NRK received from Debt record.
Then the trend turned down. At the end of February this year, the debt was almost NOK 4 billion higher, standing at NOK 127.3 billion.
Managing Director Egil Orstad expects the debt to continue to rise.
Household budgets are shrinking and there is a need to maintain consumption or obtain short-term financing for essential household costs. So things indicate that this trend will continue, he says.
Credit card debt is the most expensive
Many people use consumer loans to refinance more expensive credit card debt.
There have been little changes in the level of the interest rate on consumer debt over the past year, and it is practically not affected by changes in interest rates from the Central Bank.
The average nominal interest rate on consumer loans was 14.2 percent in January of this year, while the cost of credit card debt averaged 19.7 percent nominally.
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