Dont Buy On The Never, Never
Summary
Thousands and thousands of us use shop credit cards but are these people aware of the extremely high levels of interest fees? Read this article to find out how store cards work and to get some good advice.
We will begin by telling the truth, we are not tremdous admirers of store cards. However, there are more than thirteen million store credit card holders with outstanding balances of well over four billion pounds. And about 85 stores run shop cards, mostly department stores, large DIY retailers and clothing retailers.
Shop cards, are a branded card which can only be used in one particular shop or chain. Habitually they are the most expensive way to obtain credit, charging over and above 35 per cent interest yearly. That is far higher than the typical high street bank credit card. Since the normal store card balance is about 800 pounds, that would see card holders paying £270 a year simply in interest. That cost can quickly spread into an insurmountable debt .
Looking at the positive side of shop cards, they they can be handy as the shops normally promote them with discounts off the items bought on the card and they might also supply a longer interest free period. Clients will also get specific discount offers sent to them by letter or be told of new collections before other clients.
On the other side, peril awaits those who are easily tempted by discounts or “interest-free” or “nothing to pay for six months” offers principally those who could already be struggling with their debt . These card holders may be using the cards because they have not got the cash to pay the whole amount now and they are simply living in hope that things will be better later. Not a great idea!
Chain stores should be uneasy about overly persistent sales people promoting store credit cards to clients who have little comprehension about how to handle their use of the credit 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 period these cards are a very expensive way of obtaining credit .
We acknowledge that the cards can be very tempting in order to get a discount on your shopping bill.
However, it is ever so easy for debts on your store credit card to spiral out of control.
Hence, as a rule we recommend avoid store cards unless you are totally convinced} that you will settle the whole bill the minute the store card bill arrives.
Debt advisers are frequently lobbying the financial regulators to escalate interest rate warnings. They believe that statements for store cards should include a very bold warning revealing their APR interest rate and what the holder must pay if just the minimum amount is made.
Therefore if you do make your mind up to accept a shop card be very sure how much it will cost you. We recognise that many UK shoppers find credit cards to be a tempting way to get hefty discounts on their shopping. However please, let us reiterate, always promptly pay off the total balance each month. This is the only sure way to stay out of the debt trap
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