Store cards-trick or treat?

Hallowe’en is just around the corner and shops are stocking clothes for the new season. Nationwide has looked at how consumers can be fooled by tricky terms and conditions when picking up a treat using a store card. It is very easy for consumers to be bewitched by store card introductory offers, such as 10% off at point of purchase, only to find out later that they are still paying for the items long after the shopping spree is over. The Society is urging customers to plan ahead to help make their money go that bit further.

Store card shoppers who are able to pay off their balance each month, and can meet all the terms and conditions, might find themselves a good deal. However, for consumers who can’t meet them, it may be better to avoid the horror of high interest rates. Instead people may be better to look for a credit card with clear terms and conditions, low interest rates and 0% offers.

The worst store card culprits charge almost double the rate of credit cards, for example, Miss Selfridge, Burton and Dorothy Perkins all charge over 29% APR (annual percentage rate), compared to 15.9% APR on a Nationwide Gold Card. If a customer spent £162 on a Dorothy Perkins store card compared to a Nationwide credit card, over a three year period, they would end up paying nearly £50 more in interest.

People who are unable to clear existing store card balances should also consider 0% credit cards on transfers and purchases. Nationwide’s Classic and Gold credit cards offer a ten month 0% introductory offer on balance transfers and a three month 0% introductory offer on new purchases.

With a shocking two billion pounds being spent on store cards in the UK last year and over half of store card customers incurring interest charges, customers are spending considerably more by not planning ahead. According to the Competition Commission the average balance for shoppers paying the minimum payment is around £800, this would cost a Miss Selfridge store card customer over £190 more in interest than a Nationwide credit card customer.

Jeremy Wood, divisional director at Nationwide, said: “Although store card introductory offers look great at face value, borrowers who are unable to clear their balances each month could find that they are paying over the odds. By taking a Nationwide credit card, shoppers benefit from lower interest rates and 0% introductory offers on purchases and transfers, making their money go that bit further when treating themselves.”