Summary
Millions of us use shop cards but are they conscious of the extremely high levels of interest they demand? You will find this article extremely useful, as it explains how store cards work and provides some very good advice.

We will start by being honest, we’re not big supporters of store credit cards. Although, there are approximately 14 million store card holders with unpaid balances of well over 1.5 billion pounds. And some 80 stores manage shop cards, mostly large DIY retailers, department stores and clothing retailers.

Shop cards, are a branded credit card which may only be used in the appropriate chain or correct shop. Usually they are the most expensive source of credit, charging up to and over 35% interest per annum. That is considerably higher than the conventional local bank card. As the typical store card balance is about 800 pounds, that would mean that card holders would be paying 315 pounds a year just in interest. This can easily mount up and soon become an unmanageable debt .

Taking the positive side of store cards, they are convenient as the chain stores often promote them with discounts off the goods bought on the card and they might also offer a longer interest free period. Customers may also get unique promotions sent to them by letter or be informed of new stock before other shoppers.

On the other side, hazards await those who are easily tempted by discounts or “interest-free” or “nothing to pay for six months” offers chiefly those who may already be struggling with their debt . These credit card holders may be using the store cards for the reason that they haven’t got the money to pay in full now and they are purely hoping that things will be better later. Not a good idea!
Stores also need to be concerned about overly persistent sales assistants promoting shop cards to people who have little 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 if you don’t pay off the total amount during the interest-free time this type of card is an extremely costly way of obtaining credit .
We acknowledge that the credit cards can be so appealing when, by taking out the card you are eligible for the discounts.

However, it is ever so easy for debts on your store card to shoot out of control.
Subsequently, as a general rule we advise you to steer clear of shop cards unless you are entirely convinced} that you will settle the whole balance immediately the store card bill comes.

Debt management are frequently applying the financial regulators to raise interest rate warnings. They are of the opinion that statements for shop cards should contain a very noticeable warning stating their APR interest rate and what the card holder will have to pay if just the minimum amount is made.

Subsequently if you do make your mind up to consent to a credit card be very certain how much it will cost you. We recognise that many UK shoppers find credit cards to be an enticingan attractive way to get large savings on their purchases. However please, let us repeat, always promptly pay off the total balance each month. This is the only sure way to stay out of the debt trap