Consumers Warned to Avoid Store Cards

As the Christmas lights, the indicator that the festive shopping season is under way, are turned on in cities and towns the length and breadth of the country, shoppers are hitting the high street in their droves. However, among the shopping frenzy, consumers have been advised that store cards don't represent good value, despite what the shops say.

Some retail outlets, such as Ikea and Debenhams, have made efforts to make their cards more attractive to consumers, although they still fall short in terms of value when compared to the deals available in the credit card market. It seems that store cards attraction tends to be their convenience especially when shoppers are in the throes of Christmas shopping.

Figures released by moneysupermarket.com reveal that millions of UK store card holders are paying up to £100m a year more than they have to due to interest and other charges.

Gimmicks such as 10 per cent off your first purchase, are scant rewards when the customer would benefit financially from having the re-payments spread over six months, for example.

" Store cards are attractive to consumers at point of sale as they usually offer a discount or introductory offer when you first take out the card," said Richard Mason, director of credit cards at moneysupermarket.com.

" If you are making a big purchase, such as a kitchen or a substantial amount of clothes, my advice would be to take advantage of the discount on offer, but it is very important to absolutely ensure you pay the full debt off within the first month of taking out the store card.

" With extortionately high interest rates on most store cards if you don't pay off the debt immediately, it is best to steer clear of them."

Consumers are susceptible to store cards, particularly at this time of year, and can be easy prey for retailers, who hope that your balance is not cleared within the month, as afterwards is when they make the real money from the consumer due to their card's high interest rates.

However, some cards do make sense over the festive period, as many credit card firms are still offering some tempting deals as they fight the store cards for your custom.

There are plenty of zero per cent introductory offers on purchases, meaning you can have up to nine months to pay off your Christmas debt without accruing interest. Sainsbury's, Nationwide and HSBC are just a few who are currently offering such deals.

Other benefits to credit cards include: money back for damaged goods ordered online, insurance cover against fraud and, in some cases, cash back rewards on purchases.