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Debt advice when your store card balances are mounting

Store Card Debt overview

Store cards function in a similar way to credit cards, and can be opened either online or in store, with a monthly statement that details the minimum repayment. Unlike credit cards however, some restrict you to where you can use them.

Most stores will provide some sort of incentive to encourage you to open an account. This may be a discount of 10%, which is offered at the till, or it could be in the form of vouchers or an invitation to a VIP event.

These incentives are designed to tempt you to ‘sign on the dotted line’, but you should be aware that store cards are expensive when compared to most credit cards.

The advantages of Store Cards as a credit solution

  • If you use your store card wisely you can make a saving on your initial purchase, but by wisely we mean repaying the balance in full each and every month (so you never have to pay any interest).
  • Similarly to credit cards, store cards can allow you to purchase goods that you wouldn’t otherwise be able to purchase with a one-off payment.

The disadvantages of Store Cards as a credit solution

  • Just like credit cards, it’s easy to spend more than you can afford to repay within a reasonable time period, which can lead to a balance that stretches out over years.
  • You may be tempted to use your store card to collect points or other incentives, which may blind you to other, more suitable, purchases or offers.
  • Most store cards are offered with a low initial limit, however with regular use this credit limit can increase over time, leading to a larger and larger debt that soon becomes unmanageable.

Worried about debts that won't go away?

Debt help tips for tackling Store Card Debts

  • If you’re struggling with the burden of high balance cards it may be time to seek free debt advice. Even if you’re managing to meet the minimum monthly repayments, you should still consider how long the balance will take to repay. As a prime example, if you had a balance of £2,000 with an APR of 18%, the debt would take 34 years to repay, while the total interest would amount to £3,983.
  • If you have multiple card debts, focus on repaying the most expensive first (you can find a note of the interest rates on your statements).
  • If you still have a reasonable credit rating, you should think about moving any high balances across to a low or 0% deal card. The fee for this typically ranges between 1.5% and 3%, however you could make a saving in the long run.
  • If you have savings stashed away use them to repay your credit. With savings rates abysmally low, there’s no chance that you’re being paid more in savings interest than you are handing over in credit interest.
  • Check whether you’re due a PPI refund from past credit cards (the average PPI pay-out stands at £1,700, so it’s more than worth your while finding out whether you could be eligible).
  • If you’re struggling with card debt and can no longer even afford the minimum repayments, seek help as a matter of urgency. Start with our debt solutions page.

IVAs – A potential solution for Store Card debt

Been burying your head in the sand as to how much you owe on your store cards? It’s time to take action, and the first step is to find out whether an Individual Voluntary Arrangement could be the right debt solution for your circumstances.

*An Individual Voluntary Arrangement (‘IVA’) is subject to the customer meeting qualifying criteria and gaining creditor acceptance. Monthly IVA payments include fees and may differ to the example provided, based on the assessment made of your own personal circumstances – these fees will be clearly explained to you in writing by your IVA company. Debt write off amounts are subject to creditor acceptance and vary by individual customer based on their own financial circumstances, and are applied upon successful IVA completion.

Substantiation example, Someone owes £60,000, they pay £100 over 60 months which equals £6000, write off amount would be £54,000 which is 90% of total debt level. Upon submitting your details on this website we will pass your details to one of our approved partners as this website does not give any advice.

Free debt counseling, debt adjusting and credit information services are available from the Money Advice Service.

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