STORE CARDS

What you should know before applying for a card:-

Most store cards work like credit cards, except:-

• You can use them to buy things only in certain shops;
• You may qualify for special offers, such as discounts and late shopping night.

Repayments

• The interest rate is usually higher than credit cards.
• Usually there is a small reduction in interest if you agree to pay monthly by direct debit.

A few store cards are a bit different from credit cards. They are called 'budget cards' (or 'revolving credit'). You agree to save a certain amount each month and can borrow a set multiple of the amount you save.

For example, if you saved £10 a month, your spending limit might be up to 24 x £10 = £240.

There is usually a minimum you must save each month - for example, at least £5 or at least £10.

Charges are similar to other types of store card and usually high compared with ordinary credit cards.

Risk

With both types of card the special offers might increase the temptation to overspend.

If you find yourself experiencing difficulties meeting your payments speak to your lender. Do not put this off. Lenders do not want you to default on your repayments and will be prepared to talk to you about how to solve any repayment problems you have.

Debt Counselling offers more advice on dealing with debt problems. The Office has developed a range of Money Management Tools to help you calculate how much you will pay back when you borrow money.