My Open Book

Summary
Billions of us use store cards but are these people conscious of the staggering levels of interest fees? This article provides some good advice and explains how the store cards work.

We will begin by telling the truth, we are not big admirers of shop credit cards. Although, there are more than 14 million store card holders with overdue balances of well over 2.5 billion pounds. And about seventy five retailers manage store cards, mostly clothing retailers, department stores and large DIY retailers.

Shop cards, are a branded credit card which may only be used in the right shop or chain. Usually they are the most expensive way to obtain credit, charging up to and over 35% interest yearly. That is considerably higher than the conventional high street bank credit card. Since the normal store card balance is around 800 pounds, that would that would cost card holders 270 pounds a per annum simply in interest. This can easily mount up and soon become an uncontrollable debt .

Taking into account the plus side of store cards, they they can be handy as the shops generally promote them with discounts off the goods purchased on the card and they could also provide an extended interest free period. Clients may also get special promotions sent to them by letter or be told of new merchandise ahead of other people.

On the other side, hazards await those who are clearly tempted by ”interest-free”, “nothing to pay for six months” or discounts offers predominantly those people who may already be struggling with their debt . These credit card holders may be using the store cards for the reason that they haven’t got the cash to pay the whole amount now and they are purely hoping that things will improve soon. It’s a very bad idea!
Shops should be concerned about over determined sales assistants promoting store cards to customers who have little comprehension about how to handle their use of the store card. In our view, it’s very easy to cajole people into having a credit card, however if you are unable to pay off the balance during the interest-free period these cards are a very expensive source of credit .
We recognise that the credit cards can be so persuasive when, by taking out the card you are eligible for the discounts.

However, it remains all to easy for debts on your shop credit card to mushroom out of control.
So, as a general rule we suggest that you steer clear of store cards unless you are totally sure} that you will settle the full amount the minute the store card bill arrives.

Debt advisers are always pushing the financial regulators to raise interest rate warnings. They feel that statements for store cards should include a very noticeable warning revealing their APR interest rate and what the holder must pay if only the minimum amount is made.

Therefore if you do want to accept a store card be very certain how much it will cost you. We are convinced that many British shoppers find store cards to be an enticingan attractive way to get big savings on their purchases. However please, let us tell you again, always promptly pay off the total balance each month. This is the only way to prevent falling into the debt trap

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