Shop Card Debt
Summary
Thousands and thousands of us use shop credit cards but are these people aware of the extremely high levels of interest they demand? This article tells you how the cards perform and gives some very valuable advice.
We will start by being honest, we are not big supporters of shop credit cards. However, there are approximately 13 million store credit card holders with unpaid balances of round about 4 billion pounds. And some eighty chain stores operate shop cards, mostly department stores, large DIY retailers and clothing retailers.
Store cards, are a shop owned card which can only be used in one particular shop or chain. Habitually they are the most expensive way to obtain credit, charging up to and over 30 per cent interest per annum. That is far higher than the standard local bank card. As the typical shop card balance is about 900 pounds, that would mean that card holders would be paying 297 pounds 50 pence a per annum simply in interest. That cost can quickly spread into an insurmountable debt .
Looking at the pluses of store cards, they can be useful as the shops normally promote them with discounts off the items purchased on the card and they might also offer a longer interest free period. Customers can also get exclusive or sale offers sent to them in the post or be informed of new products before other customers.
On the negative side, danger awaits those who are clearly tempted by ”interest-free”, “nothing to pay for six months” or discounts offers predominantly those who may by now be struggling with their debt . These card holders could be using the store cards because they haven’t got the money to pay the whole amount now and they are purely hoping that they will have the money soon. Not a great idea!
High street stores also need to be uneasy about forceful sales people promoting store credit cards to clients who have hardly any conception of how to handle their use of the store card. In our view, it is all too easy to be persuaded to sign up to a store card, however unless you pay off the total amount during the interest-free period they are an extremely costly way of obtaining credit .
We recognise that the credit cards can be so appealing 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 is ever so easy for debts on your store card to mushroom out of control.
Subsequently, as a rule we counsel you to refuse store cards unless you are utterly certain} that you will pay off the whole amount when the store card bill arrives.
Debt Companies are forever petitioning the financial regulators to increase interest rate warnings. They believe that statements for shop cards ought to contain a very noticeable warning exposing their APR interest rate and what the card holder has to pay if just the minimum payment is made.
Consequently if you do want to accept a store card be very sure how much it will cost you. We know that many British shoppers find shop cards to be an enticingan attractive way to get hefty discounts on their purchases. But please, let us say again, always promptly pay off the total bill every month. Only this way can you be certain that you won’t fall into the store card debt trap
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