Are You Storing Up Trouble?

Like me, you've probably been offered a fair old number of these by now.

And, if you're like most people, chances are you maybe own at least one or two.

They always seem to put in an appearance at just the right (or wrong) moment...

It might be Saturday and you've just seen the clothing item of your dreams.

That can be a pain, though, if you're a little short on cash for that week.

But if you're undecided, you'll know just how easy it can be to take out...

...a store card.

One of the horrible ironies about store cards is that the majority of people who sign up for one actually had no intention of making a purchase before they left the house.

But if you're caught in the above situation, the convenience factor frequently wins the day, doesn't it?Add on top of this all the little goodies thrown in as asweetener...

An introductory discount on goods - typically around the 10% mark - extra money off during sales periods etc...

But let me tell you what the sales assistant probablywon't...

For starters, many department stores will currently charge you anything up to 30% interest on that little card they offer you (yes, even those ones with the pretty pictures.) That's around double the interest of your standard credit card!

Sound scandalous?

Well, hang around... it gets a lot worse.

Here are just a few of the pitfalls to look out for the next time you're tempted by a store card...

· Buy now, pay within the next three months.Sure...great deal if you do actually manage to pay it offwithin that time. If not, some stores will charge youinterest from the first day you bought!

· Ask questions. In a recent study, it was found that in one third of cases, information on the interest rate on the card (among other things) was not freely available.

· Don't be tempted to take out expensive and often useless insurance. This can be a monthly amount of 1.5%. With interest repayments of 30%, you could end up with an annual rate of 56%!

· Also, steer clear of any payment protectioninsurance scheme. If you were to lose your job or couldn't work due to illness or accident, you'll find that this 'insurance' generally only pays the minimum monthly payment, not the whole balance!

· Be on your guard. Staff will usually ask you to fill in the application form in store. In many cases the insurance box will already have been ticked and you will simply be asked to sign up for insurance.

· Study the terms and conditions carefully in the store. Staff have been known to refuse customers to take away the form. In fact, a recent survey showed that only 23% were allowed to do so.

You'll often find that if you want all the immediate benefits, you have to take the card straight away. Not the greatest idea when you want to weigh up the pros and cons that come with a financial commitment.

But probably the worst thing about store cards is that it'svery easy to build up an array of them so that, before you know it, there seems to be more of them in your wallet than there are coat hangars in your wardrobe.

And in what seems like no time at all...

... you've just spent way, way beyond your means!

If you feel you must buy on credit why not use a credit card with a low or even 0% rate? After all, if you'regoing to have debts, you may as well make them cheap ones!

A store card might seem handy and convenient but theygenerally come with a horrendous hidden cost.

So next time you're a tempted to take on another piece of plastic, make sure you get all the facts up front.

Your bank balance might just thank you for it.

Copyright © 2004 by Colin McCaig colin@cmcaig.com