Summary
An enormous amount of people use shop credit cards but are these people aware of the horrific levels of interest they charge? Read this article to find out how store cards work and to get some good advice.
We really must be truthful, we’re not big supporters of store cards. However, there are an estimated fifteen million shop card holders with overdue balances of around 4 billion pounds. And some 70 high street retailers run store cards, mostly department stores, large DIY retailers and clothing retailers.
Shop cards, are a named credit card which may only be used in the right shop or chain. Usually they are the most costly source of credit, charging up to and over thirty per cent interest per annum. That is considerably higher than the usual local bank credit card. Since the normal store card balance is about £900, that would see card holders paying 280 pounds a per annum simply in interest. This can easily mount up and soon become an uncontrollable debt .
Looking at the positive side of store cards, they they can be handy as the retailers often promote them with discounts off the goods purchased on the card and they may also provide a longer interest free period. Customers may also get particular or sale offers sent to them by mail or be told of new merchandise ahead of other people.
On the other side, peril awaits those who are clearly tempted by ”interest-free”, “nothing to pay for six months” or discounts offers particularly those who could already be struggling with their debt . These card holders could be using the cards because they haven’t got the money to pay the whole amount now and they are purely hoping that things will be better later. It’s a very bad idea!
High street stores also need to be uneasy about overly pushy sales assistants promoting shop cards to people who have little comprehension about how to manage their use of the store card. In our opinion, it’s so easy to convince someone to sign up for a store card, but unless you pay off the total amount within the interest-free period these cards are an extremely costly way of obtaining credit .
We do admit that the cards can be very enticing when if you have one, they give a discount on your shopping billin order to be able to claim the discounts on your shopping.
However, it can be all too easy for debts on your store credit card to mushroom out of control.
Hence, as a general rule we suggest that you avoid store cards unless you are entirely positive} that you will pay off the whole balance the minute the store card bill arrives.
Debt Companies are frequently lobbying the financial regulators to raise interest rate warnings. They feel that statements for store cards ought to include a very bold warning stating their APR interest rate and what the card holder has to pay if only the minimum payment is made.
So if you do choose to take out a shop card be very sure how much it will cost you. We concede that many UK shoppers find shop cards to be a tempting way to get hefty discounts on their purchases. But please, let us tell you again, always promptly pay off the full amount every month. This is the only sure way to stay out of the debt trap