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What Is Store Card Debt?

Store card debt is one of the most common forms of personal debt, just after credit cards, and it’s important to make sure that you keep on top of your finances where these cards are concerned because they can quickly see you fall into spiralling financial difficulty if you’re not careful.

 

Using store cards for purchasing consumer goods like clothes, groceries and holidays may seem like a good idea at the time, helping you to spread the cost of these purchases, but with interest and charges added on over time, you may find yourself having to spend a lot more than you initially bargained for… which is where the trouble then begins.

Key Facts About Store Cards

  • You are only able to use them in the specific shop they’re assigned to
  • Store cards can be particularly troublesome for finances and can see you fall into financial difficulties if you don’t use them responsibly
  • They often come with introductory discounts to make them more appealing, which may mean you pay more in charges and interest
  • Interest rates are often high, with many providers charging upwards of 25%
  • They’re often sold by in-store sales assistants who may not have the necessary financial knowledge to support the sale of these cards to consumers

How do you use store cards safely?

If you do find yourself in store card debt and are struggling to make repayments, it’s important to remember that you’re not alone and there is help and support available to you.

Introductory discounts

If you do decide to take out a store card, the most responsible way to use it is to take advantage of the introductory discounts and then settle the amount owed immediately. This means that you won’t have to pay anything interest.

Close the card

It can also be advisable to close the card as soon as you’ve paid the balance off so that you’re not tempted to make any more purchases.

High interest rates

Because of the high interest rates that these cards come with, small purchases can quickly bring significant consequences and, before you know it, paying off your store card suddenly starts to feel impossible to achieve.

Persistent debt

If you’ve been getting warnings about your store card being in persistent debt, it means that you’ve only been making the minimum repayments on the account over the last 18 months.

Introductory discounts

If you do decide to take out a store card, the most responsible way to use it is to take advantage of the introductory discounts and then settle the amount owed immediately. This means that you won’t have to pay anything interest.

Close the card

It can also be advisable to close the card as soon as you’ve paid the balance off so that you’re not tempted to make any more purchases.

High interest rates

Because of the high interest rates that these cards come with, small purchases can quickly bring significant consequences and, before you know it, paying off your store card suddenly starts to feel impossible to achieve.

Persistent debt

If you’ve been getting warnings about your store card being in persistent debt, it means that you’ve only been making the minimum repayments on the account over the last 18 months.

What happens next?

If we find that you are eligible for a debt relief order, we will be able to refer you to our partner for your application to be processed. For residents of Northern Ireland there is a fee of £90 which must be paid before the application is submitted; for residents of England & Wales, there is no fee to pay. If we find that a DRO is not suitable for you, then we will look into other debt solutions that suit your current circumstances.

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Sticking to a budget

Store cards may work for…

If you’re good at sticking to a budget and know how to keep track of your finances, store cards can be a useful way to make big purchases that you may not be able to afford otherwise. However, missing payments can see you fall into financial difficulties quite quickly.

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Don’t ignore the warnings

Court action may be taken

Call the store to discuss your situation

Make minimum payments to avoid falling into arrears

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Specific retailer

Store cards may not work for…

If you don’t have a specific retailer that you use a lot, store cards may be more trouble than they’re worth. If you’re not able to clear the balance in full each month, store cards may not be the best option for you.

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You could pay more in fees

Interest rates are high

Watch out for deferred interest

Don’t buy what you don’t need

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Why choose us?

Why choose Fresh Start UK?

Fresh Start UK has helped more than 12,000 people gain control of their finances and be debt-free. If you’re struggling with debt and finding it tough to keep up with your bills, speak to an adviser today.

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The upsides to store cards

img Vouchers

img Loyalty points

img Potential discounts

img Potential free delivery for online purchases, depending on the retailer

img The ability to spread costs

The downsides to store cards

img High interest rates

img Can only be used with one retailer

img Potential to spiral into debt quickly

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Money Helper has replaced the Money Advice Service and brings together the support and services of three government-backed financial guidance providers: the Money Advice Service, the Pensions Advisory Service and Pension Wise.

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