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Last Updated: Thursday, 22 September 2005, 13:26 GMT 14:26 UK
Understanding store card debt
Store cards charge up to 30% APR
Store cards can charge interest rates of up to 30%

Store cards can be a tempting way to secure a discount on your shopping but as BBC news explains shoppers often end up paying extra through high interest charges.

You're at the checkout, weighed down with purchases, and the smiling assistant behind the till offers you a 10% discount on everything - if only you'll sign up to use the shop's handy store card.

It's a tempting offer which many shoppers accept, but store cards are rarely good news.

Despite the discounts and convenience they offer, they come with a sting in the tail - an annual percentage rate (APR) of anything up to 30% on your purchases.

Many people take advantage of a credit facility from time to time, even if it is only to buy a cinema ticket or pay for a small bill in a shop.

As a rule of thumb you should steer clear of store cards unless you can pay off your balance within the interest-free period.

But it is easy for things to spiral out of control. Buying things on the "never never" used to be looked down upon - but nowadays the "buy now, pay later" mentality is widespread and considered acceptable.

Rights and responsibilities

Because people use credit so much, it is vital that they should be aware of their rights and responsibilities. But many aren't, and often assume - wrongly - that there is little they can do about their credit card and hire purchase agreements.

As the use of plastic rather than cash becomes increasingly widespread, shoppers are comfortable with the idea of using credit to boost their buying power.

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.

Charges vary between retailers (the worst rates hit 30% but some of the lower ones are just 13%) so always check carefully before signing up.

Remember that you can find credit cards that have an interest rate of 14% or less and they may be a much better bet for spending in stores.

This material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.

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