A look at store card debt

Across the UK, there are almost 13 million store cards in circulation. To some, they`re a useful way of borrowing; to others, they`re an example of expensive debt that`s better avoided.

An article on thisismoney.co.uk looks at a few facts and a few different opinions on this kind of debt.

First of all, while they work much like credit cards, they tend to come with lower credit limits but higher interest rates - 25.5% APR on average, as opposed to 16.8%, according to Which?

One criticism often levelled at them is the fact that they`re available at check-outs. Customers can sign up as they make a purchase - and a `mystery shopping` exercise found that the staff on duty don`t always explain the potential drawbacks of taking on debt in this way.

But there are many who defend store cards. Fiona Hoyle, Head of Consumer Finance at the Finance and Leasing Association (FLA), has pointed out that store cards already give people 14 days in which to change their minds - and that the average monthly interest on the average balance is only £2.80.

A spokesperson at debt management company Gregory Pennington reminded potential borrowers to think carefully before taking on debt of any kind.

"Borrowing money isn`t a decision that should be taken lightly. It`s vital that any would-be borrower understands the drawbacks as well as the benefits. They need to know not just what the interest rate is, but how much they`d be repaying every month and in total, what might happen if they can`t do that, and so on.

"With any financial product, what counts is thinking it through beforehand: working out how to make the most of the benefits and minimise the costs. If you can`t see a realistic way of doing that, it`s best to avoid borrowing altogether."



Gregory Pennington offer debt advice and debt management plans, as well as a range of other debt solutions. If you are worried about debt, contact one of our expert debt advisers now.