In physical stores and in online stores, you are increasingly offered to pay on credit. At the same time, the consumer debt that Norwegians pay interest on has increased every single month since last summer. An example from Ikea shows that the company’s own bank Ikano requires a 34 per cent effective interest rate if you want to pay in excess of NOK 5,000 within nine months. The example came up as a proposal for payment when news was shopping in Ikea’s online store. Relatively small amounts that must be repaid over a short period of time lead to the effective interest rate being very high. The effective interest rate shows what a loan actually costs. The picture was taken from an offer news received in Ikea’s online store when an amount of around NOK 5,000 had to be paid at the checkout. Ikea’s own bank Ikano is behind the offer. Photo: news The Consumer Council warns households against entering into such agreements, because the cost is very high. – This is expensive debt, and the debt we have to pay first if we already have it. If we don’t have it, we should avoid it, says specialist director Jorge Jensen at the Consumer Council. Subject director Jorge Jensen at the Consumer Council. Photo: Stig Jaarvik / news – Should be avoided Because it is expensive to trade with money you don’t have. – If you understand the numbers, it is easy to see that this costs a lot, says Jensen. And figures from Finansportalen show that smaller amounts that are repaid over a relatively short period of time can earn extremely high effective interest rates, up to several hundred percent. Customer manager Petra Hagen at Ikea says that few of their customers make use of offers to pay smaller amounts in monthly installments – and that the company offers various forms of payment solutions. Petra Hagen is customer manager for Ikea in Norway. She says that the company does not feel that more people now shop on credit than before. Borrowing for purchases at Ikea is more common for larger purchases, such as a new kitchen. In that case, the loan period is often longer and the interest rate is significantly lower. – For some, an interest rate of 30 per cent will of course be very expensive, and some will certainly not consider that offer. We will not encourage anyone to take out a loan to shop with us, and end up in a financially difficult situation, says Hagen. Policy rate in percent The policy rate is set eight times a year by Norges Bank. The policy interest rate governs the interest rates in the banks, and affects your housing costs. The aim of raising the interest rate is for the high prices to come down again. The forecast tells us how Norges Bank thinks interest rates will develop in the future. Read more about sources and reservations here. Higher interest rates mean increased expenses if you have a mortgage Consumer debt is growing after several years of falling Interest-bearing consumer debt fell steadily for two and a half years until last summer, according to figures news has received from the Debt Register. Then the trend turned downwards. At the end of February this year, the debt was almost NOK 4 billion higher, and amounted to NOK 127.3 billion. Managing director Egil Årrestad expects that the debt will continue to rise. – Household budgets are shrinking and there is a need to maintain consumption or have short-term financing for necessary household costs. So things indicate that this trend will continue, he says. Credit card debt is the most expensive Many use consumer loans to refinance even more expensive credit card debt. There have been small changes in the interest rate level on consumer debt over the past year, and it is not affected in practice by interest rate changes from the central bank. The average nominal interest rate on consumer loans was 14.2 per cent in January this year, while credit card debt cost an average of 19.7 per cent nominally.
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Warns against IKEA loans at 34 percent interest – news Norway – Overview of news from various parts of the country
