Summary
Amassive number of people use shop credit cards but are they conscious of the appalling levels of interest they charge? This article tells you how the cards perform and gives some very valuable advice.
We will begin by telling the truth, we are not huge supporters of store credit cards. However, there are more than 15 million shop credit card holders with outstanding balances of well over one billion pounds. And some eighty five retailers manage store cards, mostly large DIY retailers, department stores and clothing retailers.
Store cards, are a shop owned card which can only be used in the appropriate chain or correct shop. Customarily they are the most expensive supply of credit, charging over and above 35 per cent interest yearly. That is considerably higher than the average local bank credit card. As the average store card balance is around nine hundred pounds, that would see card holders paying £240 a per annum simply in interest. This can easily mount up and soon become an insurmountable debt .
Taking the positive side of store cards, they they can be handy as the department stores usually promote them with discounts off the goods bought on the card and they might also provide an extended interest free period. Clients would also get specific promotions sent to them by letter or be informed of new collections before other customers.
On the other side, hazards await those who are easily tempted by ”interest-free”, “nothing to pay for six months” or discounts offers mainly those who could already be juggling debt . These card holders could be using the store cards for the reason that they haven’t got the money to pay in full now and they are just praying that they will have the money soon. It’s a very bad idea!
High street stores should be uneasy about overly persistent sales assistants promoting store credit cards to people who have little grasp of how to control their use of the store card. In our opinion, it is all too easy to be persuaded to sign up to a store card, but if you fail to pay off the total amount during the interest-free time these cards are an extremely costly way of obtaining credit .
We recognise that the credit cards can be very tempting in order to get a discount on your shopping bill.
However, it can be all too easy for debts on your store credit card to spin out of control.
Thus, as a general rule we suggest that you keep away from store cards unless you are quite convinced} that you will settle the full amount the instant the store card bill arrives.
Debt consultants are continuously pushing the financial regulators to increase interest rate warnings. They believe that statements for store cards should contain a very bold warning exposing their APR interest rate and what the card holder must pay if just the minimum payment is made.
Subsequently if you do make your mind up to accept a shop card be very certain how much it will cost you. We acknowledge that many British shoppers find shop cards to be a tempting way to get large discounts on their shopping. But please, let us tell you again, always promptly pay off the total balance every month. Only this way can you be certain that you won’t fall into the store card debt trap
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