Credit cards Updated:
As tempting as it may seem to open a store card and save on your Christmas shopping, don't fall into the trap of keeping a balance on one of these cards, as it could prove to be a very costly mistake.
Most store cards will offer an introductory discount on your shopping, followed by special offers or loyalty schemes. However the downside lies in the rates of interest charged. The average store card charges interest at a whopping 24.6% - that's eight percent higher that an average credit card, and four times that of a best buy personal loan.
Take for example an average store card, with an interest rate of 24.6% requiring a minimum repayment of 3% (min £5). To repay an initial balance of £500 would take a staggering 11 years and 10 months; with the total repayable over double your initial spend, at £1,082.98.
So bearing this in mind, the 10% or 20% initial discount on your shopping suddenly doesn't seem so attractive.
By all means make the most of the discounts on offer, as these can be especially worthwhile on larger purchases, but don't let your initial saving go to waste by paying over the odds with very high rates of interest.
If you find yourself unable to repay your balance in full, most credit card companies will accept balance transfers from store cards. With balance transfer deals available of up to 0% to 1.1.08 (fee 2%, min £5) or lifetime balance transfer deals as low as 3.9%, this is certainly an avenue worth exploring and could save you hundreds of pounds in interest charges.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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