Cheap Now Expensive Later

Summary
Millions of us use shop credit cards but are they aware of the horrendous levels of interest fees? This article explains how the cards work and provides some valuable advice.

We really must be truthful, we’re not huge admirers of shop credit cards. Although, there are more than 13 million shop card holders with overdue balances of above 2.5 billion pounds. And approximately seventy chain stores operate shop cards, mostly department stores, large DIY retailers and clothing retailers.

Shop cards, are a branded credit card which may only be used in one particular shop or chain. Usually they are the most expensive supply of credit, charging up to and over thirty per cent interest per year. That is far higher than the usual local bank credit card. Since the typical shop card balance is around nine hundred pounds, that would mean that card holders would be paying 280 pounds a year simply in interest. That can quickly add up leading to an insurmountable debt .

Looking at the positive side of store cards, they they can be handy as the retailers usually promote them with discounts off the goods bought on the card and they could also provide an extended interest free period. Clients will also get specific or sale offers sent to them by letter or be told of new merchandise ahead of other people.

On the negative side, hazards await those who are easily tempted by ”interest-free”, “nothing to pay for six months” or discounts offers particularly those people who may already be struggling with their debt . These credit card holders may be using the store cards because they haven’t got the money to pay the whole amount now and they are purely hoping that things will improve soon. Not a good idea!
Chain stores should be uneasy about forceful sales people promoting store cards to people who have little grasp of how to control their use of the credit card. In our opinion, it is all too easy to be persuaded to sign up to a store card, but if you fail to pay off the total amount within the interest-free time these cards are a very expensive way of obtaining credit .
We do admit that the cards can be so appealing when, by taking out the card you are eligible for the discounts.

Nevertheless, it is ever so easy for debts on your shop credit card to spiral out of control.
Thus, as a rule we recommend avoid shop cards unless you are utterly positive} that you will pay off the whole balance the minute the store card bill arrives.

Debt Companies are always lobbying the financial regulators to increase interest rate warnings. They think that statements for store cards ought to contain a coloured underlined warning showing their APR interest rate and what the holder is required to pay if only the minimum amount is made.

Consequently if you do make a decision to say yes to a shop card be very sure how much it will cost you. We know that many UK shoppers find shop cards to be an enticingan attractive way to get hefty savings on their shopping. However please, let us tell you again, always promptly pay off the full balance each month. This is the only sure way to stay out of the debt trap