Store cards can be mistaken for credit cards; they look the same but a credit card can be used in any shop whilst a store card can only be used in the store where it is accepted. Store cards could be mistaken for loyalty cards as they give you points for shopping in store. A person can use a store card to pay for goods, but with loyalty cards they just gather points.
Store cards are generally easy to obtain and the Annual Percentage Rate (APR) is typically very expensive. If you are struggling in managing debts from a store card then there are a number of different routes you can take.
High Interest Rates
Approximately two thirds of the major store cards on this market charge over 25% interest, alarmingly some are nearly 30%. This is a huge amount especially when you compare these to a standard credit card rate of interest.
These cards are being offered to shoppers by staff members who have no idea of the impact and unseen hidden dangers of a card with such high interest rate. In some instances staff members can be given a commission for signing people up to these cards or required to meet targets.
Who is targeted
Store cards may be the first piece of debt a young person will take out, so they are racking up expensive ill-afforded debt from an early age. People can be given a percentage discount off of their purchases on the day they take out the card. If you forget to cancel your card before the first month’s payment then you will have to pay charges.
The most common selling tactic of a store card is to get an immediate discount on the shopping that they are paying for with an introductory discount.
With store cards the retailer knows that people will be loyal to them as it is only in their shop they will get a discount, yet they charge people very high interest rates for the card.
When you take out a store card you are not taking the credit out with the store but it is with a third party finance lender. You will purchase the goods and the card will have the name of the retailer on it but your monthly bill will come from the finance company.
If you decide to take out a store card then you really need to remember to pay of the outstanding balance every month so you are not paying high interest and charges. It is easy just to pay the minimum payment every month but you would really need to be careful as the interest is very high on these cards. You can take advantage of deals and discounts on store cards but always remember to pay them off to avoid expensive charges.
For help with store card debt, please call one of these charities:
StepChange: 0800 138 1111
Debt Advice Foundation: 0800 043 40 50
Citizens Advice Bureau: 0808 223 1133
National Debtline: 0808 808 4000