Summary
Millions of us use store cards but are they conscious of the horrificly high levels of interest fees? This article is worth reading, as it explains how shop cards work and gives valuable advice.

We really must be truthful, we are not huge admirers of store cards. Nevertheless, there are an estimated 14 million store credit card holders with overdue balances of round about three billion pounds. And about seventy high street retailers operate store cards, mostly large DIY retailers, department stores and clothing retailers.

Store cards, are a shop owned card which may only be used in one particular shop or chain. By tradition they are the most expensive way to obtain credit, charging up to and over 30% interest yearly. That is much higher than the average high street bank credit card. Since the typical shop card balance is about £850, that would that would cost card holders 270 pounds a per annum just in interest. This can easily mount up and soon become an insurmountable debt .

Looking at the pluses of shop cards, they they can be handy as the department stores normally promote them with discounts off the items bought on the card and they could also offer a longer interest free period. Customers may also get specific discount offers sent to them by letter or be told of new stock before other clients.

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 juggling debt . These card holders could be using the cards for the reason that they have not got the money to pay in full now and they are just praying that things will be better later. Not the perfect plan!
Shops also need to be concerned about forceful sales people promoting store credit cards to clients who have hardly any conception of how to manage their use of the credit card. In our opinion, it’s very easy to cajole people into having a credit card, but unless you pay off the whole amount during the interest-free period this type of card is an extremely costly way of obtaining credit .
We do admit that the cards can be very tempting in order to get a discount on your shopping bill.

Nonetheless, it remains all to easy for debts on your shop credit card to climb out of control.
In view of that, as a rule we suggest that you refuse shop cards unless you are absolutely certain} that you will pay off the whole amount the instant the store card bill comes.

Debt Specialists are always pressing the financial regulators to raise interest rate warnings. They are convinced that statements for shop cards ought to include a very noticeable warning exposing their APR interest rate and what the holder is required to pay if only the minimum amount is made.

So if you do opt to accept a store card be very aware how much it will cost you. We are convinced that many UK shoppers find credit cards to be an enticingan attractive way to get hefty savings on their purchases. However please, let us repeat, always promptly pay off the full amount each month. This is the only sure way to stay out of the debt trap

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This entry was posted on Sunday, October 4th, 2009 at 9:41 am and is filed under General Interest. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.