Store Cards

Note: Store cards can be extremely tempting, if you're out shopping and can't afford an item that you want to buy. But they can quickly trap you in a world of debt.

For reasons that will soon become apparent, I don’t have much to say about this subject, so I’ll keep it short and sweet. Let me start by saying that store cards are evil. DON’T TOUCH THEM!

Not only are they the credit equivalent of gift vouchers, but they also charge extortionate rates of interest that can reach 30%.

At 30% APR an average debt of $5000 over the year will cost you $1500 in interest. Scandalous! Even worse is the fact that paying the minimum amount each month (usually 3%), it would take around 30 years to repay $1000, and cost in the region of $6000. Double Scandal!!

It’s enough to make a loan shark blush!

But store card debt can creep up on you almost without noticing. These cards can be obtained in minutes, the rates of credit are not always displayed or made clear and consumers are not give time to inspect the terms and conditions.

A moment at the tills, a decade worth of bills!

Yet tens of millions of people around the globe have a store card. And a staggering 42% of cardholders never intended to sign up for one of these accounts until they were tempted in the store. See what I mean, it takes great willpower to resist their charms (i.e. being able to purchase goods on the spot that you can’t afford).

And my advice?

Anyone with one of these things should grab some scissors take it to the bin and cut it up immediately. Why limit the places where you can use your purchasing power? Why pay interest rates that are astronomical? If you must borrow, use a low rate credit card which will be both cheaper and will be accepted virtually everywhere rather than limited to a certain store.

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