Store cards 'are the devil in disguise'

Despite a ruling by the competition commission last year to govern promotion and advertising of store cards, it appears that they still offer very poor value for money when the cost of interest payments are added to the purchase price.

Store cards, offered in an attempt to encourage loyalty, are 'rewarding' their customers with repayment interest rates of over 20 per cent - the Bank of England's base rate is five per cent, with banks loaning money at approximately seven to eight per cent and credit cards offering long balance transfers at zero per cent, for a small fee.

Ed Bowsher, savings expert at Fool.co.uk says: "Store cards are the devil in disguise.

"They initially offer attractive benefits and bonuses, which can be hard to resist - but there is a downside to grabbing these discounts and deals. Store card-holders should be aware of the high interest rates which come hand in hand with introductory offers - and should remember that these cards are designed to make you spend, rather than help you save, money. If you've spent on a store card and are still paying off the balance, that debt could be costing you far more than it needs to. However, by making use of a nought per cent balance transfer credit card, you could avoid paying any interest for up to 15 months."

Householders struggling to afford their monthly mortgage or rent, utility bills and home insurance premiums may find that they can save a little money each month by re-negotiating their borrowing.

10/06/2008 17:20:16