In recent years we have been swept away with the notion of “buy now, pay later” and it has allowed us to have what we want when we want it.
Credit cards are no longer a luxury item for the rich and famous but an accessory we almost can’t live without. Because of the growing amount of people with credit cards, the market is becoming more and more competitive and people are becoming more confused about what is and isn’t a good deal.

To take advantage of this information overload, cards are now targeting where the problems start – in store.
Store Cards are increasingly becoming more popular, particularly in department stores, as a convenient way to shop and gain rewards in your favourite or most frequented store. So what’s the catch?

Store cards don’t pose a problem if you are disciplined enough to pay off the balance within the interest-free period (typically between 35 and 55 days).

But, if you can’t pay the outstanding balance each month, the interest due on the unpaid debt can soon mount up. And it won’t be hard to do with the annual percentage rate (APR) hitting the 30 per cent mark on some store cards.
Store cards are regulated under the Consumer Credit Card Act, which sets out rules for any loan under £25,000. The taskforce is also examining whether a complete overhaul of this is needed.

Impulse Buying

Offered at the point of sale, store cards can be obtained after an application has been filled in and a credit check has cleared, which can literally take as little as 10 minutes. You can start spending on you store card as soon as you’ve signed the dotted line.
Recent research by the Office of Fair Trading has revealed that many people who take out a store card had no actual intention or want in making a big purchase before they reached the shops. In fact, 42% of people who take sign up for store cards never had any intention of doing so before they were asked at a point of sale and persuaded by the sales person.

It’s up to you

Store card rates vary, but according to data provider Moneyfacts some of the worst offenders are Comet’s Timecard which currently charges an APR of 29.9% and Debenhams whose store card charges an APR of 28%.
Better value store cards include John Lewis (includes Waitrose) with an APR of 13% and Marks & Spencer at 18.9%.
Most financial experts agree that credit cards with lower APRs are generally a better deal than store cards. But, you may be tempted by some of the benefits of a store card which could include introductory discount on goods - typically around 10% - or extra money off during the sale period.
Keep these points in mind

Before signing up for a store card take some advice from the Office of Fair Trading:

1. An initial discount may be a good deal - but it will depend on how quickly you pay off the balance.
2. Be APR wise - just how much will you pay on an un-cleared balance?
3. Is there is an interest-free period? When does it end and what will the interest rate be afterwards?
4. Check all details of the agreement - APR, interest free period, penalties for default and late payment - and don’t be afraid to ask questions.
5. Remember to consider carefully the costs and benefits of any Payment Protection Insurance (PPI) offered. It is optional and will cost you money.
6. Compare with other payment methods.
7. A store card can be a serious credit commitment for which you may need to budget.
8. Beware of pushy sales staff and don’t be lured into taking out a store card you don’t want – remember, the person selling it to you will probably be rewarded if they sign you up.
9. There is no need to sign on the spot - if in doubt, take the agreement away, read it and seek advice on it before you sign.
Carrying around a purse or wallet-full of credit and store cards can be a temptation to spend more than you can really afford. And, like any credit card, a statement will only come once a month making it difficult to keep track of how much you’ve spent overall.

Various credit cards and store cards are designed for various people with different needs. If you are considering a store card look into all the options and read the fine print. Is that new pair of shoes really worth what you’re paying plus a possible 30 per cent? Shop around, and get you and your money the best deal.

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