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Leo Hamel Fine Jewelers Policy Letter

Rev1

“Deferred Interest” is Not the Same as “No Interest”

Be aware that there is a difference between the “90 days deferred interest” terms offered by GE Money for instance, and “90 days no interest.”

“No interest” means that the interest will not even start to accumulate until the end of the 90-day period. “Deferred interest” (once called “same as cash” but GE Money now prefers “deferred interest”) means that interest starts accumulating from the date of purchase, but if the customer pays in full by the end of the 90 days, he or she won’t have to pay that interest. Be aware that our standard deferred interest financing DOES require minimum monthly payments be made during the promotional period.

If the customer doesn’t pay by the end of the 90 days, the interest that has been accumulating since the date of purchase will be added to the outstanding balance, and the customer will have to pay that back as well as the original purchase price.

Since we are offering “deferred interest” we can’t say we are offering “no interest” unless we include a specific disclosure (see below) to reveal under what circumstances the customer will not pay any interest. Otherwise it could be misleading to our customers, and we could be in for trouble. So don’t say “no interest” in letters or promo without the appropriate disclosure. Verbally you can call it “deferred interest” and then explain that they won’t have to pay any interest if they pay the balance off within the term of the promotional period.

For small promo pieces where there isn’t enough room for the full disclosure statement, we can simply say, “Special 12-Month Financing Terms Available, See Store for Details.”

Suggested Disclosure:

With Payments/Deferred Interest

Headline: No Interest If Paid Within 12 Months* (Minimum monthly payments required)

* Valid on purchases of $xxx or more on a GE Money Luxury credit card account. On promo purchase, monthly payments required, but no finance charges will be assessed if:

  1. promo purchase paid in full in 12 months
  2. any minimum monthly payments on account paid when due
  3. account balance does not exceed credit limit

Otherwise, promo may be terminated & finance charges assessed from purchase date. On promotions requiring a minimum payment, payments over the minimum will usually be applied to those promo balances before non-promo and other balances. If you have a non-promo balance, this may reduce the benefit from the promo. If you want to change this allocation, please call Customer Service. Standard terms apply to non-promo purchases, optional charges & existing accounts. As of 11/01/08, variable APR: 22.99% & on all accounts in default, 29.99%. Minimum Finance Charge $2.00. Subject to approval by GE Money Bank.

Leo Hamel, Founder