The Hidden Cost Of Store Cards
It happens all the time. You go into one of your favourite shops and hear the offer over the public address system: ‘An extra 10% off today if you apply for one of our store cards.’ This seems like a good idea for people who shop regularly in a particular place but there are a number of reasons to be careful about applying for store cards.
When Is A Store Card Not A Store Card?
First of all, the name ’store card’ is misleading. It makes them sound friendly. But store cards are another form of credit card. Like credit cards, people can use store cards to defer payment for purchases. Like credit cards, store cards charge interest on uncleared balances. And like credit cards, people have to apply for them.
Although it can be tempting to have a store card for each place you shop in, people should avoid this temptation. Every store card application will become part of your credit history. People who make more than three applications within a seven month period are likely to be turned down for some cards. This will adversely affect their credit rating.
Store Card Interest Rates
A key difference between store cards and credit cards is the interest-free period. While credit cards typically have interest-free periods of up to 56 days, many store cards have none. People pay interest on the debt from the day it goes on the card.
What is worse, the interest rates on most store cards are very high. The Competition Commission recently said that British consumers were being overcharged by
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