Charge cards that store up your debts
Stores claim that their charge cards offer shoppers numerous benefits - but at what cost?
Saturday 05 December 1998
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.
Life & Style blogs
Looking past the search results: Google 2.0 will 'build airports and cities' says report
There is literally not a single woman in this iPhone 6 queue
Anti-depressants can change how the brain works in just hours
iPhone 'Wave': iOS 8 hoax claims you can charge your iPhone in the microwave - you can't
The 'Angelina Jolie effect': Her mastectomy revelation doubled NHS breast cancer testing referrals
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
Archbishop of Canterbury admits doubts about existence of God
- 1 Mario Balotelli: Staff at arson-hit Manchester Dogs' Home convinced Liverpool striker is behind five-figure donation
- 2 Friends 20th anniversary: Alison Jackson photographs reunited cast
- 3 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 4 The response to my Pizza Express review has been overwhelming, and taught me a lot about journalism
- 5 Free U2 album: How the most generous giveaway in music history turned into a PR disaster
£30000 - £35000 per annum: Ashdown Group: Marketing Manager (CIM, B2B, MS Offi...
£22000 - £25000 per annum: Ashdown Group: A highly successful organisation wit...
£1 per day: Randstad Education Leeds: Job Purpose To work closely with the he...
£32000 - £42000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...