Store cards are a form of credit card where a consumers can spend on the card and then either repay the balance in full at the end of each month in order to avoid interest, or can spread the repayments on the card over a period of time, in which case interest will be charged on the balance until it has been repaid in full. Although more and more shops are now offering store cards, there are not many benefits to having these cards and they can quickly lead to mounting debt for the consumer. Below you will find five of the top reasons to avoid taking out store cards:
1. The interest rates. The rate of interest charged on most store cards if the balance is not repaid in full at the end of each month can be extremely high, and can quickly add to the balance, leaving the cardholder in increasing debt. Those that make minimum repayments on the card will fare particularly badly as they will be the ones that are hit hardest by the interest payments.
2. Temptation. Store cards are well known for increasing the chances of impulse buying, and many sales staff at shops bank on consumers' impulsive streaks in order to get them to sign up for a card. When you sign up for a store card you often end up purchasing something you would otherwise not have bought simply because the salesperson offers you a discount for taking out the card. In addition, future discounts may encourage you to make purchases that are unnecessary, and if you don't repay the balance in the interest free period any discount will be counteracted by interest charges anyway.
3. No cash transaction facilities. A store card does not enable you to make cash withdrawals and transactions, and this means that if you need cash in an emergency you will certainly not be able to rely on your store card. You would be far better off with a credit card, as this allows you to withdraw cash or make cash transactions should you need to, although these are best avoided wherever possible due to high charges that are applied.
4. Restrictions of use. With a store card you are very restricted in terms of where you can use it. You can only use your store card in a particular shop or chain of shops, and this means that you have very little in the way of choice. You may be able to get the same or a similar product cheaper elsewhere but may end up going for the most expensive one simply because you have a store card for that particular retailer.
5. False economy. Many store cards offer a range of discounts to cardholders when it comes to their products. However, unless you tend to repay your balance in full at the end of each month -in which case you would fare far better with a rewards based credit card due to increased freedom and a choice of rewards- any discounts would be counteracted by the very high rates of interest charged on your balance.
Top 5 Tips on Easing the Financial Hangover
After Christmas and New Year celebrations have finished many of us find that we are left feeling tired, drained of energy, and worse still drained of money. The Christmas period can be a very financially demanding one, and once the festive season is over many of us take stock of our finances only to discover that we have spent far more than we originally planned leaving us facing financial difficulties.
In order to ease the financial hangover that can hit many of us at this time of year there are a number of steps that you can take. This include:
1. Check whether you can get a better deal on your credit card. If you have used your credit card to fund Christmas and you are being charged a high rate of interest you may find that one way to save money is to switch your card to another type of card, such as a 0% balance transfer card, which will allow you additional time without being charged interest to repay your balance. This could save you a small fortune in terms of interest.
2. Could consolidation help? If you have accrued a fair amount of debt over the Christmas period with store cards, credit cards, loans, etc. and you already had some debt prior to this you may find that one effective solution is to wrap up all of these debts into one lower rate consolidation loan. This will ease financial management for you and could save you a fortune in interest. It could also help to reduce the amount that you pay out each month.
3. Cut out your unnecessary spending. Most of us splash out more on going out, buying clothes, and treating ourselves over the festive season, but you should avoid continuing this into the New Year. Try making a few cutbacks when it comes to shopping for non-essentials and going out - the money you save could be put towards the debt you have accrued over Christmas or you could put it aside in savings towards next Christmas.
4. Don't hoard what you don't need. Let's face it - we all get presents over the Christmas period that we did not really want and will not use. If this is the case why not look at getting rid of some of these gifts rather than hoarding them for prosperity. With portals such as Ebay available, selling your unwanted goods needn't be a hassle, and you could raise a fair amount of cash to put towards repayment of your debts.
5. List where you can make savings. Go through your accounts and make a list of services on which you could save money, such as your car insurance, home insurance, utilities, broadband, etc. Then use the various price comparison sites to see whether you could save money compared to what you are currently paying. If so, make the switch and you could soon be saving a small fortune each month to put towards repayment of your debt.
In order to ease the financial hangover that can hit many of us at this time of year there are a number of steps that you can take. This include:
1. Check whether you can get a better deal on your credit card. If you have used your credit card to fund Christmas and you are being charged a high rate of interest you may find that one way to save money is to switch your card to another type of card, such as a 0% balance transfer card, which will allow you additional time without being charged interest to repay your balance. This could save you a small fortune in terms of interest.
2. Could consolidation help? If you have accrued a fair amount of debt over the Christmas period with store cards, credit cards, loans, etc. and you already had some debt prior to this you may find that one effective solution is to wrap up all of these debts into one lower rate consolidation loan. This will ease financial management for you and could save you a fortune in interest. It could also help to reduce the amount that you pay out each month.
3. Cut out your unnecessary spending. Most of us splash out more on going out, buying clothes, and treating ourselves over the festive season, but you should avoid continuing this into the New Year. Try making a few cutbacks when it comes to shopping for non-essentials and going out - the money you save could be put towards the debt you have accrued over Christmas or you could put it aside in savings towards next Christmas.
4. Don't hoard what you don't need. Let's face it - we all get presents over the Christmas period that we did not really want and will not use. If this is the case why not look at getting rid of some of these gifts rather than hoarding them for prosperity. With portals such as Ebay available, selling your unwanted goods needn't be a hassle, and you could raise a fair amount of cash to put towards repayment of your debts.
5. List where you can make savings. Go through your accounts and make a list of services on which you could save money, such as your car insurance, home insurance, utilities, broadband, etc. Then use the various price comparison sites to see whether you could save money compared to what you are currently paying. If so, make the switch and you could soon be saving a small fortune each month to put towards repayment of your debt.
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