Store card holders rack up billions in interest
The average store card APR is 10% higher than the average credit card, according to uSwitch, and 16 million users pay 62% more in interest than credit card holders.
Research from uSwitch, an independent price comparison site, has revealed that using store cards for Christmas shopping will cost UK consumers £2.8 billion in interest in 2008. This is £892 million more than those using a credit card will incur in interest charges.
There are currently 13.4 million store card accounts in the UK carrying an outstanding balance of £2.17 billion. The average APR on such cards is 26.34%, according to uSwitch. This means holders are paying 62% more in interest the average credit card, which has an APR of 16.25%.
Mike Naylor, personal finance expert at uSwitch, said: “People are typically lured into store card ‘deals’ at the checkout because they will get a small discount on the purchase being made. In most cases, this discount will be completely negated by the high levels of interest incurred by those who do not pay the balance off in full every month.
“More importantly, a busy checkout in a department store is not the best location to allow people to make an informed financial decision and read the small print before signing up. This could explain why there are almost 16 million of these cards in circulation costing consumers anything up to 30% APR.”