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The convenience of having a store card at your favourite store is very enticing. You can buy the items when they come on sale and have everything you need when you want it. There are pitfalls with using store cards that have gotten many consumers into financial difficulty in the past. With today’s financial crisis, it is more important than ever before that you be wary of using store cards for your purchases so that you won’t become deep in debt. Most of the store cards available have a high rate of interest, often as much as 40% more than that charged by the standard credit card companies. If you already have several standard credit cards that are maxed to the limit, then obtaining a store card is not a viable option for you. It will only place greater financial strain on your already strapped resources and force you to make the minimum monthly payments on your account. With the high rates of interest charged on store cards, it will take you a very long time to pay off the amount you spend in this manner. Quite often the interest charged each month may be more than the required minimum payment, which will increase the amount of money that you owe. Even if it is lower than the payment, the difference is not likely to be very much. In order to avoid paying away most of your money on interest payments when you have an outstanding balance that you cannot pay off before the end of the interest free period, you should set a budget of how much money you can afford to spend this Christmas season. It is not just the cost of the gifts that you have to factor into this budget because Christmas means more food and clothing for entertaining guests as well as decorations for your home. Instead of just wandering around the store purchasing everything that catches your eye, plan your shopping experience based on the discounted items and the specific items you want to buy. With the Christmas season just around the corner, it is a very good possibility that many consumers are planning to use their store cards for their Christmas shopping. If this is the case with you, you should prepare a budget for this purpose so that you won’t overspend and get yourself into financial difficulty being unable to repay the balance on the card in full. Plan your shopping experience so that you know what you want to buy and how much you can afford to spend this Christmas season. The interest rate charged on store cards is often as much as 40% higher than that of standard credit cards. Even though these rates have been investigated by the Competition Commission, they are still in place. Take note of the interest rate charged on your store card before you use it and if you must use this card try to use it to your advantage. If you do overspend you could find yourself in debt for years. If you have a low credit score and you feel that by using a store card and making regular payments you can work towards raising your score. However, this may not be the case. You could actually lower your score if you run up the balance and are unable to pay it off in a timely manner. In order for a store card to be effective in helping you get over the added expense of Christmas, you should prepare a budget of how much you can afford to spend at this time of the year. Then when the statement comes in during January, you will not receive a shock at how much you have actually spent and then become stressed about how you are going to pay off the balance on the card.
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Alisdair Cosgrove has been writing credit card hints and tips for many years and can find more of his work at the UK site www.CreditCardsBureau.co.uk, offering interest free credit cards for UK residents and also a great selection of balance transfer credit cards.
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