Today, almost every high street chain provides its customers with the opportunity to benefit from greater discounts through the use of in-store credit cards. In theory, taking out a store card with your preferred department store seems an attractive venture. However, in practice, it is important to note that stores do not always have customers' best interests at heart when devising such marketing strategies. Most individuals invariably end up spending more on purchases made using store cards because of high interest payments. As such there are a number of important issues that you should bear in mind when taking out an in-store credit card.
It is often difficult to resist the tempting discounts associated with most store cards. A ten or fifteen percent discount can save you a great deal of money when making large purchases. However, bear in mind that the purchases you make when using a store card are made on credit that is by no means interest free! Some store cards charge interest rates of up to 30% per annum. Needless to say you may end up paying more than you bargained for as a result. Beware of the other marketing strategies sometimes associated with in-store credit cards. Purchasing goods on a 'buy now, pay later' basis, for example, could prove rather expensive as your bills and interest payments add up.
If you still want the healthy discount offered by a store card, but do not want to face the prospect of mushrooming card payments, what should you do? Essentially, you need to make sure you are able to keep up financially with the payments that need to be made on your in-store card. Most stores offer an interest-free period on purchases of between 35 and 55 days. Furthermore, some retailers offer relatively lower rates of interest on credit purchases – the norm is roughly 20%, but some stores have rates as low as 13%. When deciding on an in-store card, it may also be worthwhile to look into whether or not the shop in question offers additional privileges to card-holders, as the advantages associated with these perks could well outweigh the costs associated with moderate to high interest rates. Some high-street chains also offer card-holders a host of other benefits, such as early-bird shopping privileges during seasonal sales or free shipping on purchases made online.
Thus, when taking out a store card, you should primarily take note of the interest rate you are expected to pay on outstanding payments once the interest-free period has lapsed. However, if you do find that your store card debt is spiralling out of control, there is help available. The Consumer Credit Counseling Service (CCCS) can provide you with impartial advice and assistance on this subject. Contact information for the CCCS can be found here.
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