Shoppers warned on “scandal” of poor value store cards

1st September 2015


Shoppers have been warned against taking out store cards in the run up to Christmas as the discounts on offer are likely to be dwarfed by high borrowing costs.

Customers using a typical store card must weigh up the overall cost to them and not be swayed by the upfront discount, according to the latest research by

Based on an interest rate of 29.9% APR, below is a table highlighting the high cost of these cards if they are not paid off in full before interest applies, even a simple £100 purchase could take over two years to pay off.

Rachel Springall, finance expert at, says: “Store cards are a complete scandal for customers if they don’t pay off the balance as soon as they have made their purchase. This is because these cards charge extortionate interest rates compared to other reasonable credit cards on the market, the majority of store cards charge around 29.9% APR.

“Shoppers are likely to be persuaded at the till to take out a store card, most likely to get a discount on the goods they have purchased, but they should never assume they are getting a good deal. As a comparison the lowest interest rate they could achieve on a normal credit card is just 6.4% APR.

“Customers will only be allowed to use store cards in a specific stores and the subsequent interest that applies each month will wipe out most discounts given upfront. If customers know they can definitely pay off the balance in full, they could aim to get a larger discount on a bigger spend for extra savings.

Springall says that using a cashback card for purchases is a wiser option, but if shoppers are mainly focused on a longer-term repayment, then they should consider an interest-free credit card instead. Customers can get a staggering 26 months interest-free on the best introductory purchase credit card.

She adds: “Before committing to a store card the most important rule for shoppers is to pay back the balance in full before interest applies and secondly, if they have used the upfront benefits in their entirety, cut up the card and close the account.”

Scenario 1 – Store Card charging 29.9% – based on a minimum repayment

Cost of purchased goods

Interest after 1 month*

Time it takes to pay off

Total interest applied

Total cost of goods and interest

Shoes or clothes



1 year



Winter coat



2 years 2 months



Washing Machine



12 years 7 months



*Based on minimum repayment £5, or 3.2% assuming no other portion of balance is cleared


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