Show caution with store cards
Some distressing news has emerged from a recent piece of research by a high profile consumer group, which suggests that the rates of interest are unrealistically and even exploitatively high. Not only that, the findings expressed the view that these cards were easier to get than they should be; encouraging people to take on greater levels of debt than they can afford to service and tempting them towards serious debt problems and even insolvency. As much as this activity can be judged from an ethical point of view, in reality there is relatively little that can be done to prevent it. The only response open to consumers is to take an educated, grown-up approach to this type of credit and manage the debt efficiently or avoid it altogether.
Taking the example of a graduate with a pre-existing backlog of student debt, with earnings amounting to less than a thousand pounds over the year, they would be able to achieve £3000 worth of debt, spread across a few stores. Not only are these store cards a notoriously expensive way to borrow, some have such high rates of interest, those over 25%, that they must come with a warning to potential borrowers that cheaper rates of interest for credit are available elsewhere. However, such is the ease of qualification for this type of store credit that these warnings and high interest rates may not serve to put off individuals that have struggled to attain credit from other streams. This is an already vulnerable section of the marketplace but luckily, there are avenues of assistance open to those people facing dept problems.
Although spending on store cards is often curtailed by a lower credit limit than is available with a standard credit card, the aforementioned high rates of interest and the sale of these cards by under qualified staff in high street stores, who tend not to be interested in their customer’s suitability for credit, amounts to a risky debt scenario. It’s quite a common problem too, with Finance and Leasing Association estimating that there are almost 15 million store cards currently in circulation, amounting to about £3 billion worth of store credit. These figures are the result of the accessibility of store credit, at the very check-out where you can begin to build up the debt.
Harrington Brooks are one of the longest established financial institutions in the country and are only a phone call away if you are looking for expert advice about how to deal with your debt. If you think you need some debt advice, try the free, 15second debt wizard at Harrington Brooks to help you find the best debt solution for your circumstances.