Book-up
Information about vendor-provided, short-term credit
Book-up is a common practice in rural or remote communities, allowing consumers to buy goods, usually groceries, on credit. This service may require some form of security to be left until payment is made, such as the consumer's bank debit card (or keycard).
Book-up is covered by the Consumer Credit Code when:
- more than $50 is booked up; and
- a credit fee is charged that exceeds 5% of the amount booked up or the annual interest rate charged is more than 24% of the amount booked up.
Book-up is a useful tool to provide for yourself and your family if you are short of money or awaiting a 'pay day'. Also, because there are few, if any, banks and automatic teller machines in some remote parts of Western Australia, book-up can be handy when you have difficulty getting access to your money at regular intervals.
However, several recurrent problems with book-up services have been identified:
- consumers can be tied to one store and be unable to shop elsewhere;
- some traders keep poor transaction records;
- inability to access your records;
- book-up customers have limited access to their funds;
- uncooperative traders don't disclose how they calculate the amount charged;
- traders mark up prices for book-up customers
- the system contributes to reduced financial knowledge on the part of book-up customers; and
- there can be confusion and disagreement over the use of book-up by family members or friends.
More drawbacks of book-up and government initiatives to eliminate them are outlined in the Australian Security and Investment Commission’s Book up – not always consumers’ friend.
A 'good' book-up service involves the trader:
- providing you with receipts and an itemised statement (with dates and prices) of goods or services you have bought;
- charging cash and book-up customers the same price for goods purchased;
- not charging book-up customers or charging a reasonable fee for the service;
- advising customers of any fees and charges for the book-up;
- informing customers of the length of time before they have to pay for the goods;
- allowing book-up customers to view their records at anytime;
- keeping records of purchases and money owing in a safe and secure place; and
- keeping these records confidential.
For more information on the differences between ‘good’ book-up service and ‘bad’ book-up service, read Good book-up Bad book-up.
Tips for book-up users
- When you set up a book-up arrangement, make sure you take someone with you who will provide you with support and a second opinion.
- Fix a maximum limit for your book-up - don't leave it open-ended.
- Understand the terms and conditions and request them in writing.
- Keep all your receipts so you can verify the quantity and price of the items you bought. This will help you resolve any disputes.
- Provide the trader with a list of all people allowed to use your book-up credit. This precaution will stop unauthorised people from accessing your funds.
- Avoid giving traders both your debit card and PIN number. This is essentially a blank cheque and may breach the terms of your bank agreement.