Store cards provide financial headache for many borrowers

Splashing out on a brand new summer or autumn wardrobe may cost shoppers far more than they had initially expected, according to Alliance & Leicester Personal Loans. For the one in four people (24 per cent) in the UK who own a store card, they can expect to pay on average 26 per cent interest on their purchases, over three times more expensive than a competitive low-rate personal loan.

While the temptation to make an initial saving on purchases in-store can result in customers opening up a seemingly harmless store card, average interest rates of 26% mean that the millions of cards in use across the UK could turn out to be a very expensive ‘money-saving' option.

For those who find they have amassed a large amount of debt, whether through store cards or otherwise, taking out a personal loan may be a wise choice to consolidate the total sum. At Alliance & Leicester people can also benefit from getting their hands on the cash on the same day. Whether you are looking to undertake home improvements, buy a new car or pay off expensive store cards, both new and existing customers can benefit from being able to access funds on unsecured loans in a matter of hours.

Mark Boyle, Personal Loans Manager at Alliance & Leicester, said: "Summer is as good a time as any to sit down and reassess your finances. Whether you are saving for a family holiday, or to free up some cash to make home improvements, it is good to take stock of outstanding debts."

Mark Boyle continues: "For those who wish to make their debt easier to manage, taking out a personal loan and consolidating it into one easy to manage chunk may be a wise option. With the same day funds option, the loan is paid into your current account within a matter of hours - thus enabling borrowers to use the funds with immediate effect.

"And with one of the best rates available on the high street, our personal loans aim to meet the needs and budgets of virtually everyone."

Samantha Owens, of Moneyfacts, says: "With summer well underway, the temptation to splash out on holidays and summer wardrobes is high. However it is paramount for customers to understand that store cards do not offer attractive rates of interest and are, in fact, some of the highest rates around. Customers should avoid being seduced by seemingly attractive benefits and bonuses.

"For those with debts already on a store card, it is wise to move it somewhere cheaper, with a more affordable rate of interest. Taking out a personal loan may be a good choice for those who find that debt has caught up with them. Personal loan rates can be much lower than store cards and with the regular fixed repayments, the loan is split into more manageable chunks, which is easier for borrowers to pay back."

For anyone interested in bagging a low-rate loan, Alliance & Leicester's website, alliance-leicester.co.uk, provides access to useful tools including a Loan Calculator, which enables people work out how much they can afford to borrow and how long they wish to spread their repayments.