High Interest Causes Store Card Debts
We must be honest! We are not big fans of store cards.
Nevertheless, there are more than 12 million store card holders with outstanding balances of well over 2 billion pounds.
And some 70 retailers operate store cards, mostly clothing retailers, department stores and large DIY retailers.
Store cards, are a branded credit card which can only be used in one particular shop or chain.
Traditionally they are the most expensive way source of credit, charging up to and over 30 per cent interest per annum.
That is far higher than the typical high street bank credit card.
As the average store card balance is around 800 pounds, that would see card holders paying 240 pounds a year simply in interest.
That can quickly add up leading to an unmanageable debt.
Looking at the positive side of store cards, they can be useful as the retailers often promote them with discounts off the goods bought on the card and they may also offer an extended interest free period.
Customers will also get special promotions sent to them I the post or be informed of new merchandise ahead of other customers.
On the negative side, danger awaits those who are easily tempted by discounts or "interest-free" or "nothing to pay for six months" offers particularly those who may already be struggling with their debts.
These card holders may be using them precisely because they have not got the cash to pay in full now and they are simply living in hope that things will be better later.
Not a good policy! Stores also need to be worried about overly persistent sales assistants promoting store cards to customers who have little understanding about how to control their use of the card.
In our view, it is all too easy to be persuaded to sign up to a store card, but unless you pay off the balance within the interest-free period they are a very expensive source of credit.
We do admit that the cards can be very tempting in order to get a discount on your shopping bill.
However, it remains all too easy for debts on your store card to spiral out of control.
Therefore, as a general rule we advise you to avoid store cards unless you are absolutely sure that you will pay off the full balance as soon as the store card bill arrives.
Debt advisers are constantly lobbying the financial regulators to increase interest rate warnings.
They feel that statements for store card should contain a very bold warning stating their APR interest rate and what the holder will have to pay if only the minimum payment is made.
So if you do decide to accept a store card, be very aware how much it will cost you.
We know that many British shoppers find store cards to be a tempting way to get hefty discounts on their shopping.
But please, let us reiterate, always promptly pay off the full balance every month.
That way you'll avoid the store card debt trap.
Nevertheless, there are more than 12 million store card holders with outstanding balances of well over 2 billion pounds.
And some 70 retailers operate store cards, mostly clothing retailers, department stores and large DIY retailers.
Store cards, are a branded credit card which can only be used in one particular shop or chain.
Traditionally they are the most expensive way source of credit, charging up to and over 30 per cent interest per annum.
That is far higher than the typical high street bank credit card.
As the average store card balance is around 800 pounds, that would see card holders paying 240 pounds a year simply in interest.
That can quickly add up leading to an unmanageable debt.
Looking at the positive side of store cards, they can be useful as the retailers often promote them with discounts off the goods bought on the card and they may also offer an extended interest free period.
Customers will also get special promotions sent to them I the post or be informed of new merchandise ahead of other customers.
On the negative side, danger awaits those who are easily tempted by discounts or "interest-free" or "nothing to pay for six months" offers particularly those who may already be struggling with their debts.
These card holders may be using them precisely because they have not got the cash to pay in full now and they are simply living in hope that things will be better later.
Not a good policy! Stores also need to be worried about overly persistent sales assistants promoting store cards to customers who have little understanding about how to control their use of the card.
In our view, it is all too easy to be persuaded to sign up to a store card, but unless you pay off the balance within the interest-free period they are a very expensive source of credit.
We do admit that the cards can be very tempting in order to get a discount on your shopping bill.
However, it remains all too easy for debts on your store card to spiral out of control.
Therefore, as a general rule we advise you to avoid store cards unless you are absolutely sure that you will pay off the full balance as soon as the store card bill arrives.
Debt advisers are constantly lobbying the financial regulators to increase interest rate warnings.
They feel that statements for store card should contain a very bold warning stating their APR interest rate and what the holder will have to pay if only the minimum payment is made.
So if you do decide to accept a store card, be very aware how much it will cost you.
We know that many British shoppers find store cards to be a tempting way to get hefty discounts on their shopping.
But please, let us reiterate, always promptly pay off the full balance every month.
That way you'll avoid the store card debt trap.
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