A store card is one of the most expensive credit streams on the market. Their interest rates were described by a leading consumer group as “unnecessarily high” and they have also come in for criticism due to the ease with which consumers can access this credit.

Usually, this is at the checkout and the salesperson, quite often someone with no experience of the financial services industry, entices you with into the credit agreement with initial savings on the purchases you’re making that day. In this situation, with a queue mounting behind you and the thought of pounds off the items you’re buying, the pressure to sign up can leave little time to scour the small print.

Although the credit limit on offer with a store card is usually a lot lower than that which would be offered by a traditional credit card, they do often come with an extremely high rate of interest. So, for the recently graduated individual with an outstanding student debt and annual earnings that are under £1000, it’s estimated that they could secure up to £3000 worth of credit, spread out over a few stores. Amongst more experienced shoppers, the store card has a reputation as being one of the most expensive ways for anyone to secure credit. Sadly though, they are also one of the easiest ways to borrow. They’re about the only credit stream that are obliged to come with a warning that’s designed to highlight to borrowers that there are other options on the market that offer cheaper interest rates.

Recent estimates suggest that there is somewhere in the region of 15 million store cards currently in circulation in the UK alone. This sector is worth an estimated £3 billion in transactions. With so many people at risk from severe debt problems, more thorough checks on prospective borrowers could limit the numbers who get themselves into difficulty. At present, there is no legal obligation for stores to share their customers’ credit history with other lenders or for them to work alongside credit referencing agencies to ensure that the borrower can afford to take on any further debt. Ultimately, this is a question of responsibility. Although this will be down to the individual, many feel that the lender has a duty to act honourably and in good conscience.

This is not to say that store cards are inherently unethical. There are lots of people who benefit greatly from the convenience of store cards and can take full use of the discounts available. Not only that, studies have shown around 60% of active store cards have no outstanding balance. It is a convenient credit stream but it’s also incredibly expensive. You just have to bear this in mind. Reducing the amount of debt on your store cards should be a priority when tackling your unsecured debt problem. Debtsolver are experts in the field of debt management and have an in-depth knowledge of the debt solutions available. If you are trying to reduce your outstanding store card debt, they can go through your options and help you to find the debt solution that is best suited to your circumstances.

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1. 7 Card Tricks to Deal with your Debt
2. Debt Dodging – The Top Ten Benefits Scandals
3. A Quick Guide to Managing Your Debt
4. Debtsolver’s 5 Tips for Getting the Best from your Credit Card
5. The Five-Step Plan to Clear Debts

This entry was posted on Monday, March 15th, 2010 at 8:01 am and is filed under Debt News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.