'High cost' of store cards worrying, say debt charities

Debt charities say they are concerned about the high interest rates that are offered on store cards.

Around two thirds of UK store cards charge more than 25% interest but some go above 30%, says MoneySavingExpert.com

They offer attractive discounts and you can be signed up for one in minutes.

Latest figures from the charity show that the average store card debt for someone under 25 is £489.94.

"Store cards remain a form of high-cost credit, and if not used carefully, can result in paying back substantial amounts of interest," says Edward Ware of the StepChange Debt Charity.

The British Retail Consortium (BRC) said: "There are nearly 13 million store card accounts in the UK but credit limits are low and many customers pay off the balance each month."

Karen Syme, who's 21 and from Glasgow, got into trouble when she took out a store card in August 2012.

"I'd saved £120 to buy a suit I needed for a job interview. I was offered a store card and told I didn't need to pay for the suit straight away.

"At the time I thought it was amazing and bought loads of other stuff."

Six weeks later Karen got a letter in the post saying she had to pay the money back. She couldn't afford it.

"I put the letter in my bedroom drawer and forgot about it. I was then hit with late payment charges, overdraft charges and direct debits bounced back", she says.

"In the end my Mum had to bail me out. The suit ended up costing me more than £250."

In 2012, new measures were introduced to help protect customers from being pressurised into signing up for a store card.

Fiona Hoyle from the Finance & Leasing Association (FLA) said: "These changes are helping customers make informed decisions about whether a store card is right for them."

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