Interest free credit offers your customers the opportunity to spread the cost of their purchase over a fixed time and with equal monthly payments, but without having to pay extra. Great for customers making larger purchases who can budget for a monthly expense without having to pay all up-front.
Our consumer research shows that retail finance can be a great tool for driving sales, with 83% of consumers saying that purchasing with point of sale finance meant that they were able to spend more overall 1 . The report also highlights that 47% say it’s more convenient, while 44% have said it helps them with budgeting. But it’s worth noting that 78% of consumers who haven’t used POS finance said that an interest-free option would increase their likelihood of them using it in the future.
For many, committing financially to a big purchase for a long period of time can be a difficult decision to make. And if the finance comes with a high interest rate, it can become a burden – taking longer to pay off the amount owed and costing more overall.
Interest free credit (IFC), however, offers customers the convenience and flexibility of buying what they need to, at no additional cost. This is particularly helpful in an economic climate like today, where a new boiler for example can be costly but an essential purchase in winter this can become a budget friendly purchase for a traditionally expensive item.
And it pays off for retailers too as basket sizes have increased when the option is available 2 . This is because customers are able to select and choose the specification on the products they really want which will cost more but still fits with their monthly budget with clear, regular payments that won’t change over time.
As the UK economy faces an uncertain future, spending is carefully considered in many households across the country. A recent Barclays UK Consumer Spending Report pointed out that non-essential spending had fallen by 1.6% in 2020 3 .
While households are increasingly weighing up payment options for their purchases, offering interest-free finance plans could give you that competitive edge and help close the spending gap.
Our research shows that 27% of consumers said that if finance options weren’t available, they would likely have gone elsewhere that did offer it 1 .
In other words, interest free credit options are an added bonus that could drive loyalty and better customer experience, with large household brands offering 0% and advertising on major platforms its now become an expected offering.
It’s important that you play your cards right when offering interest free plans. Choosing the right time and tactics when offering IFC could become an instrumental part of your business model.
