Store card shoppers behind on payments - Debt - News - Moneyfacts


Store card shoppers behind on payments

Store card shoppers behind on payments

Category: Debt

Updated: 19/01/2015
First Published: 19/01/2015

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Store cards and catalogue repayment schemes can be an appealing source of credit for shoppers, particularly young women, especially if there is an immediate discount upon signing up. However, this type of credit can easily push you into debt, which could have consequences for your credit rating and future borrowing needs.

Store card spending

According to research carried out by Debt Advisory Centre (DAC), one in four UK adults (26%) shop using store cards or credit from a catalogue. Women are particularly fond of this form of credit, with 29% of female respondents saying that they shopped this way, compared with 23% of men.

The younger generation are also more likely to sign up to a store card or take advantage of catalogue offers with extended repayment dates. A third of those questioned aged between 25 and 34 years old admitted to shopping in this way.

Falling behind

However, although this is an easy and popular form of credit for young people, it is also clear that this age group is more likely to fall into arrears with their repayments.

The research revealed that a third (33%) of store and catalogue credit shoppers aged between 25 and 34 had fallen a month or more behind with their repayments. This is a much higher number than the average rate of store card and catalogue arrears across all age groups, which is closer to one in five (18.5%). This suggests that young people are particularly vulnerable to falling into debt with these forms of credit, which could have long-term consequences.

The consequences of store card debt

Falling behind with any repayments is never good news, and store card debt is no different. While the initial offers may be enticing, it can be all-too easy to start getting behind, and this could cause issues in the future.

"Shopping using a store card can seem like a convenient way to pay," commented Ian Williams, a spokesperson for DAC. "Similarly, catalogues allow people to buy clothes and other items with an extended repayment period… However, the level of arrears among young people in particular is shockingly high.

"Not only may this lead to them being hit with additional charges and borrowing costs, but their credit rating may also suffer. This could impact on their ability to get a mortgage, loan or other form of credit in the future."

Tackling debt

So what can you do if you have started to fall behind on your repayments? Well, first things first - stop spending! Cut up the store cards and don't be tempted to take up another offer from a catalogue. This way, you can tackle the debt you already have without adding to it.

Next, speak to your lender as soon as possible. Keeping them in the dark about your repayment issues won't help anyone and informing them could mean that they come up with an affordable repayment plan that will clear your debt.

Another solution could be to transfer your store card debt to a 0% interest balance transfer credit card. Some of these cards have interest-free periods of up to three years, which could give you the time you need to pay off the debt without having to cover the cost of interest, too.

What next?

Find the best 0% balance transfer deal

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.

Related Articles

Overdraft charges add millions to problem debt

Charges on unarranged overdrafts are spiralling, says StepChange Debt Charity, adding millions to problem debt – and there are calls for them to be capped as a result.

Debt problems hit record high

Do you struggle with debt? You’re not alone. It seems that debt troubles are becoming increasingly prevalent, and in fact, research shows that the number of people seeking help with debt problems has already hit a record high in 2016.

Do you worry about debt? You’re not alone

Being in debt can be a difficult time. It can have physical as well as mental effects, with all that stress taking its toll on everything from general health to sleep and even relationships, and new research shows how much of an impact it can have.