Dont Buy On The Never, Never
Summary
Amassive number of people use store credit cards but are they conscious of the appalling levels of interest fees? This article explains how the cards work and provides some valuable advice.
We must begin by being truthful, we are not huge supporters of store cards. Although, there are on average fifteen million store card holders with overdue balances of round about 1.5 billion pounds. And approximately seventy retailers operate shop cards, mostly clothing retailers, department stores and large DIY retailers.
Store cards, are a branded card which can only be used in the right shop or chain. Traditionally they are the most pricey source of credit, charging over and above 35% interest per year. That is considerably higher than the typical high street bank credit card. Since the average store card balance is about £850, that would see card holders paying £297.50 a year just in interest. That cost can quickly spread into an uncontrollable debt .
Taking the positive side of shop cards, they can be useful as the stores generally promote them with discounts off the items bought on the card and they may also supply an extended interest free period. Customers will also get unique or sale offers sent to them by letter or be told of new collections ahead of other shoppers.
On the other side, hazards await those who are clearly tempted by ”interest-free”, “nothing to pay for six months” or discounts offers chiefly those people who could already be struggling with their debt . These credit card holders may be using the store cards because they have not got the money to pay in full now and they are just praying that they will be able to pay next month. Not a great idea!
Retailers should be uneasy about overly pushy sales assistants promoting shop credit cards to customers who have little comprehension about how to manage their use of the credit card. In our opinion, it’s so easy to convince someone to sign up for a store card, but if you are unable to pay off the total amount during the interest-free period these cards are a very expensive source of credit .
We do admit that the credit cards can be so appealing in order to get a discount on your shopping bill.
Nevertheless, it can be all too easy for debts on your store card to escalate out of control.
Hence, as a general rule we advise you to avoid store cards unless you are totally confident} that you will pay off the total bill the instant the store card bill arrives.
Debt Companies are continually applying the financial regulators to increase interest rate warnings. They are of the opinion that statements for shop cards ought to include a coloured underlined warning exposing 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 agree to a shop card be very aware how much it will cost you. We are aware that many British shoppers find credit cards to be a tempting way to get huge savings on their purchases. However please, let us tell you again, always promptly pay off the total bill each month. This is the only way to avoid the store card debt trap
This entry was posted on Wednesday, September 30th, 2009 at 4:11 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.