Warning about store cards

A new report has revealed that many who take out store cards felt they were pressured into it and didn’t realise the costs involved. Although in-store discounts and member benefits appear to offer good benefits, as with other types of credit cards, you can quickly build up debt and have to pay exorbitant interest rates .

The study, by MyVoucherCodes.co.uk, found that, of those own a store card, only 39 per cent said they had signed up for it willingly, while 42 per cent felt they were pressured into it. The other 19 per cent felt they were in some way conned into it and didn’t fully realise what they were signing up for.

One of the problems is that people who take out store cards think that they are discount cards and can be used to collect reward points, rather than a type of credit card that can only be used in a single shop or shop group.

Farhad Farhadi of MyVoucherCodes.co.uk pointed out that There’s nothing wrong with getting these cards, providing you can keep the payments under control and not spend more than you know you can afford to pay back.

With the average debt on store cards reported to be about GBP1,300, the research also found that nearly two-thirds thought cards allowed them shop now, and pay later, and that interest wouldn’t be added to the amount borrowed.

Despite many store cards offering a large discount on purchases made in store that day, this is not a cheap way of borrowing, as store cards can charge up to 10 per cent more on annual interest than the average credit card rate .