Summary
Thousands and thousands of us use store credit cards but are these people conscious of the extremely high levels of interest fees? This article provides some good advice and explains how the store cards work.
We have to be honest, we are not tremdous fans of shop credit cards. Although, there are approximately eleven million store card holders with unpaid balances of above 4 billion pounds. And about 75 retailers manage shop cards, mostly department stores, large DIY retailers and clothing retailers.
Shop cards, are a named credit card which can only be used in the appropriate chain or correct shop. Habitually they are the most pricey source of credit, charging up to and over thirty per cent interest per annum. That is much higher than the average high street bank card. Since the typical shop card balance is about 850 pounds, that would mean that card holders would be paying 240 pounds a year just 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 usually promote them with discounts off the goods purchased on the card and they may also offer an extended interest free period. Clients will also get unique promotions sent to them by mail or be told of new collections before other people.
On the negative side, danger awaits those who are easily tempted by ”nothing to pay for 6 months”, “interest-free” or discounts offers mainly those people who may by now be juggling debt . These card holders could be using the cards for the reason that they haven’t got the money to pay the whole price now and they are purely hoping that things will improve soon. It’s a very bad idea!
Retailers should be concerned about overly pushy sales people promoting shop credit cards to people who have little conception of how to control their use of the card. In our opinion, it is extremely easy to sweet talk someone into signing up for a store card, however if you are unable to pay off the whole amount during the interest-free period these cards are a very expensive way of obtaining credit .
We accept that the credit cards can be very enticing 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 escalate out of control.
Consequently, as a rule we advise you to ignore shop cards unless you are quite certain} that you will pay off the whole bill when the store card bill comes.
Debt advisers are always lobbying the financial regulators to raise interest rate warnings. They are of the opinion that statements for store cards should include a very noticeable warning stating their APR interest rate and what the holder is required to pay if just the minimum payment is made.
Consequently if you do opt to say yes to a credit card be very sure how much it will cost you. We know that many UK shoppers find credit cards to be a tempting way to get hefty discounts on their purchases. But please, let us say again, always promptly pay off the full amount every month. Only this way can you be certain that you won’t fall into the store card debt trap
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