Store and Credit Card Debts
Credit cards are the most common form of personal debt, with store cards not far behind. These cards can lead to spiralling financial problems thanks to the tendency to spend on consumer goods – such as groceries, clothes and holidays – with a buy now, pay later mind-set. However, by the time ‘later’ comes around, interest and charges can leave your balance looking much bigger than initially anticipated and this is where the problems begin.
The difference between credit cards and store cards
Although these cards look similar and offer you the same ability to spend now and pay later, there are significant differences between credit cards and store cards. You can use a credit card practically anywhere; payment networks, such as Visa and MasterCard, allow for global spending. Store cards, however, can only be used within that store. For example, a Next store card can be used at any Next store across the UK, but other retailers will not accept it as a method of payment.
The perils of store cards
Store cards are widely recognised as a particularly dangerous form of credit and it’s easy to understand why. Store cards often come with a tempting introductory discount, typically off the purchase you are already making. While this may be a money-saving tactic in the short-term, the reality is that many people find themselves paying out far more in interest and charges than they saved with the discount in the first place. Store cards are notorious for their huge rates of interest; many store cards tend to charge 25% and upwards whereas credit cards tend to offer long interest-free periods and a standard rate of around 17%-18%.
The technique to using a store card safely is to take out the card (if you really wish to), benefit from the immediate discounts and then pay it off straight away, so you never have to pay a penny in interest. It is also advisable for you to close the card once you have paid the balance down to zero to prevent further temptation. If you forget to pay of the store card balance, the card operators will hit you with sky-high interest, often ranging between 25% and 30% which can increase the balance on the card significantly.
Struggling with store card or credit card debts?
Taking out a store card or credit card can seem like a harmless and useful tool at first but it’s easy to fall foul of the fees and interest that is applied once you fail to repay the balance each month. Debts of this nature are deemed ‘unsecured debts’ and we can help individuals across Scotland that are suffering with financial problems stemming from credit and store cards through a number of formal debt remedy procedures that protect you from creditors and threats of legal action.
Speak to one of our friendly, experienced advisers for free today and arrange a free no-obligation consultation with one of our Scotland-based team.