Charge cards that store up your debts

Stores claim that their charge cards offer shoppers numerous benefits - but at what cost?

HARD-UP CHRISTMAS shoppers can sometimes find it tempting to apply for last-minute store cards at the store they hope to buy some of their gifts from. Indeed, research shows that impulse is among the most important reasons when applying for a store's charge card.

The number of cards is on the increase. According to the British Retail Consortium, there are over 12 million in issue, with an average balance of pounds 170. But whether most of these cards give value, by comparison to mainstream credit cards, is open to question. With just a couple of exceptions, store cards charge the highest interest of any card type.

More traditional "option" store cards mostly offer an interest-free period of 56 days, then charge interest from the date that purchases are charged to an account, if it is not cleared in full each month. It is that interest charge which, with few exceptions, can bring tears to the eyes.

The very cheapest cards are from Fortnum & Mason (16.8 per cent APR) and John Lewis (18 per cent APR). But most store cards charge APRs at least 5 per cent higher even than than the average 22 per cent APR on bank-supplied credit cards.

The most expensive include Style Card (up to 39.2 per cent APR) usable at over 25,000 retailers, and Country Casuals (29.8 per cent APR). These rates are charged when you pay off your card by direct debit. Payment by any other means will push up interest charges by an average of 2 per cent.

A growing number of stores also offer so-called "budget" cards. These have no interest-free period: you pay interest on your balance from the date you incur it. Most of these budget cards charge exactly the same APRs as the "option" cards on issue from the same stores.

Some electrical retailers, such as Dixons, Curry's and Powerhouse, only offer budget cards. In all cases, your credit limit on these cards is set as multiples of 24 to 25 times an agreed monthly payment to the card account.

Budget cards are designed for those people who are unable to clear their monthly balance. The extra cost of these cards over bank cards with no interest-free period can be as high as 15 per cent.

Retailers claim to offer cardholders extra benefits. Harrods, Fortnum and Mason, and others, arrange cardholder-only, pre-Christmas shopping evenings. Viyella offers free alterations to clothes bought with its card.

Many stores also give cardholders early access to their annual sales, and some offer extra discounts for card purchases whenever they hold sales. Marks & Spencer offers cardholders preferential personal loan rates.

At best,the "option" store cards offer convenience, but only if you pay them off within the interest-free period. Otherwise, like the "budget" cards, they are more expensive than equivalent cards directly available from banks.

Unless you have a mania to incur vast debts and pay through the nose to service them, these are usually cards to avoid.

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Life and Style
Couples have been having sex less in 2014, according to a new survey
New Articles
i100... with this review
Have you tried new the Independent Digital Edition apps?
Life and Style
ebooksA superb mix of recipes serving up the freshest of local produce in a delicious range of styles
Life and Style
ebooksFrom the lifespan of a slug to the distance to the Sun: answers to 500 questions from readers
Holly's review of Peterborough's Pizza Express quickly went viral on social media
footballTim Sherwood: This might be th match to wake up Manchester City
Arts and Entertainment
musicHow female vocalists are now writing their own hits
New Articles
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Blahnik says: 'I think I understand the English more than they do themselves'
Arts and Entertainment
Michelle Dockery as Lady Mary Crawley in Downton Abbey
TVInside Downton Abbey series 5
Life and Style
The term 'normcore' was given the oxygen of publicity by New York magazine during the autumn/winter shows in Paris in February
fashionWhen is a trend a non-trend? When it's Normcore, since you ask
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Marketing Manager - Leicestershire - £35,000

    £30000 - £35000 per annum: Ashdown Group: Marketing Manager (CIM, B2B, MS Offi...

    Marketing Executive (B2B and B2C) - Rugby, Warwickshire

    £22000 - £25000 per annum: Ashdown Group: A highly successful organisation wit...

    SEN Coordinator + Teacher (SENCO)

    £1 per day: Randstad Education Leeds: Job Purpose To work closely with the he...

    Research Manager - Quantitative/Qualitative

    £32000 - £42000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam