Care urged over store cards

19 December 2006
Consumers are being urged to take care when using store cards and to make sure they settle their accounts on time to avoid hefty interest charges.

New research from the financial comparison website Fool.co.uk shows that one in nine people do not pay off their accounts in full every month, and one in three are completely oblivious to the interest rates they are being charged as a result.

Earlier this year the Competition Commission highlighted the inflated interest rates that consumers were being charged on store cards and demanded that retailers charging more than 25 per cent tell cardholders that they can find cheaper credit elsewhere.

But despite the warnings it seems many consumers are still being lured by store cards, whether it be for discounts offered upon opening an account or the availability of instant credit, and while they can be beneficial if used sensibly, carelessness can cost money.

David Kuo, head of personal finance at Fool.co.uk said: "In general, store cards don't pose a problem if you pay off balances in full within the interest-free period, which is typically around 56 days.

"But a significant minority may find that any benefits they had initially hoped for have been eroded by high interest charges because they have not paid off their balances in full."

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