Store Cards Encourage Debt

Summary
An enormous amount of people use store cards but are they conscious of the horrific levels of interest fees? This article explains how the cards work and provides some valuable advice.

We have to be honest, we are not huge admirers of store credit cards. Although, there are more than 14 million store credit card holders with unpaid balances of around 4 billion pounds. And some 85 stores manage shop cards, mostly department stores, large DIY retailers and clothing retailers.

Store cards, are a branded card which may only be used in the appropriate chain or correct shop. By tradition they are the most expensive source of credit, charging up to and over thirty per cent interest per year. That is much higher than the conventional local bank card. As the average shop card balance is around 900 pounds, that would mean that card holders would be paying 255 pounds a per annum simply in interest. That kind of cost can easily mount up becoming an uncontrollable debt .

Taking into account the plus side of store cards, they can be useful as the department stores generally promote them with discounts off the goods purchased on the card and they may also provide an extended interest free period. Clients can also get particular promotions sent to them in the post or be informed of new brands before other shoppers.

On the other side, hazards await those who are clearly tempted by ”nothing to pay for 6 months”, “interest-free” or discounts offers particularly those who may by now be juggling debt . These card holders could be using them precisely because they haven’t got the cash to pay the whole amount now and they are living in hope that things will be better later. Not a great idea!
Chain stores also need to be concerned about over determined sales people promoting store credit cards to customers who have little understanding about how to manage their use of the card. In our view, it’s so easy to convince someone to sign up for a store card, but if you don’t pay off the total amount within the interest-free period this type of card is an extremely costly way of obtaining credit .
We do admit that the credit cards can be so appealing when, by taking out the card you are eligible for the discounts.

Nevertheless, it remains all to easy for debts on your store credit card to rocket out of control.
Hence, as a rule we counsel you to ignore store cards unless you are entirely sure} that you will pay off the whole bill immediately the store card bill comes.

Debt consultants are incessantly applying the financial regulators to raise interest rate warnings. They feel that statements for shop cards ought to include a very noticeable warning stating their APR interest rate and what the holder has to pay if only the minimum payment is made.

Therefore if you do opt to accept a credit card be very certain how much it will cost you. We know that many British shoppers find credit cards to be a tempting way to get huge savings on their shopping. But please, let us say again, always promptly pay off the full amount each month. This is the only way to avoid the store card debt trap

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