Warning over store card debt risk

Store cards can be very enticing for consumers this Christmas, but consumers should be aware of their potential to drag them deep into debt, an expert has said.

Associate director of Credit Action Joanna Parsley said such products can be very tempting when offered on the spot as part of a deal including a discount on an item the customer is buying at that moment.

“However, signing up in store means for many consumers that reading the small print is a low priority,” she noted.

Ms Parsley added: “We would always urge consumers thinking of taking out a store card to make sure they know of any other fees or clauses that might impact on them down the line.”

And as well as these concealed charges, there is also the issue of the high rates of interest levied on many such accounts, which Ms Parsley warned can lead to people suffering a lot of debt.

The best way to deal with this is to pay off any spending on such products within a month, the expert advised.

While card providers may make a lot of money from the interest racked up by consumers, recent data from Credit Action has shown credit card debt often becomes so overwhelming many consumers are unable to pay it all back.

During the third quarter of this year, banks and building societies wrote off £740 million of debt on credit and store cards, the charity revealed.

Individual voluntary arrangements may have accounted for much of this by reducing the amounts to be paid back to creditors.

By Amy White