Store cards can be very appealing, offering discounted shopping on a buy-now-pay-later agreement. But store cards can be very dangerous if they are not used carefully.
Despite the discounts and convenience they provide, store cards can come at a hefty price with many attaching an annual percentage rate (APR) of up to 30% on your purchases.
Even if you begin use store credit for small purchases, things can easily spiral out of control. Many people nowadays are struggling to meet their full repayments on credit and store cards due to the rising living costs, resulting in high interest charges and mounting bills.
Be smart about your card use
Credit and store card use is commonplace at the moment. If you regularly use store credit, you need to be clever about it.
Firstly, you should always read the terms and conditions of the credit agreement. Many stores offer varying interest rates so it is vital that you check the APR percentage before you spend anything. Some stores offer interest rates as low as 13%, whereas some have a whopping 30% APR.
If you feel you are able to manage your finances well, it may be beneficial for you to use store credit, but you must be sure that you can clear the full balance when you receive the bill. Store cards don’t pose a problem if you are disciplined enough to clear the accrued balance within the interest-free period. Most interest free periods range from 35-55 days.
Where to turn if store card debts are mounting
If you find yourself unable to pay off your store card debt, and find the balance you owe is continuously rising, it may be a good idea to consider a debt management plan.
Debt management plans can cover all of your unsecured debts, including credit cards, store cards, catalogues, unsecured personal loans and overdrafts. All debts would be grouped together and an affordable monthly amount will be decided by you and the debt management plan provider. This monthly fee would then be paid to the company providing your plan and they would then manage your debts for you.
A great benefit of a debt management plan is that you do not have to liaise with your creditors any more, and the interest and charges being added to your accounts will be stopped indefinitely. This means that with each monthly payment you make, you will only be paying toward the capital debt that you owe.
Debt management plans stop the cycle of debt and give peace of mind to debtors, in knowing that the balances on all debts are lowering each month, until the debt is paid off.
While engaged in a debt management plan, you will be assigned a personal finance manager, who will keep in regular contact and offer advice and assistance wherever it is needed. They will also be able to update you on the status of your finances, and will be able to tell you exactly how long it will take before you become debt free.
For a free consultation with one of Sterling Green’s qualified financial advisers, call 0800 083 2827.
Written by Katie Simpson ©