Store cards resulting in high levels of debt
A recent study carried out by the Alliance & Leicester indicates that the temptation put forward by retailers at this costly time of year could be fuelling the UK’s debt crisis quite dramatically, leaving some consumers well over a thousand pounds in debt by the time the festive period is over.
 This is the time of year when many people rush out and buy last minute gifts, food, and clothing ready for Christmas and New Year. Shops are making this as easy and convenient as possible, with far later opening hours so that workers can also make their necessary purchases – and with the tempting offer of a store card.
According to the study, almost a quarter of UK shoppers have utilized store cards for their Christmas shopping, and many of these state that they only did this because they were tempted into taking out the card when they went in to purchase something. The store cards are then used not just over Christmas but also well into January, with the sales looming up as soon as the New Year festivities are over.
A loans manager working for the Alliance & Leicester stated: "Christmas costs can really add up and some of the offers pushed at us by sales assistants in connection with their store cards can seem really tempting. The real costs of these discounts, however, may be with you for a long time as interest payments stack up."
A more sensible solution for shoppers that need to ‘buy now and pay later’ is to check the interest rate charged on their credit cards and see whether this is a more cost effective option – although it would be too late for consumers to apply for and receive a new interest free credit card, those with cards offering a far lower rate of interest than many store cards could save themselves a fortune in interest.
Alisdair Milton
29th December 2006
More Information:
- How To Manage Your Store Card
Many major outlets offer store cards. These provide an easy way for consumers to defer payment for purchases. Store cards are promoted over public address systems in shops and by shop assistants at checkouts. So it's no surprise that there are more than 14 million store cards accounts in the UK.
- Get The Most Out of Credit Cards This Christmas
With Christmas just around the corner, many consumers in the UK will see their wallets feel the strain of Christmas shopping. With many already overspending, one way to relieve the financial pressure over the festive season is to see what credit and store cards in the marketplace can save you money and offer rewards for those spending sprees.
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