Why You Should Avoid Store Cards

With the Christmas season fast approaching, it is more important than ever to try to avoid using store cards wherever possible. This is because of the tendency to overspend when you enter the store for which you have a credit card and see something that really strikes your fancy. So many people turn to credit cards to help ease the financial crunch associated with buying Christmas gifts for family and friends and delaying the inevitable of paying for these purchases until the start of the. The reality of spending too much on store cards sinks in when you get your statement in January.

This Christmas is likely to be worse than ever with more and more people turning to store cards to buy the gifts they need because of the downtown in the economy and the limitations on receiving credit and loans from banks and other lenders. Even credit card companies are feeling the brunt of the recession and are not approving people for store cards in the large numbers that they have been in the past. This means that consumers are having to turn to store cards as a means of paying for the extra purchases for Christmas gift-giving.

You need to exercise caution is this is the manner in which you plan to fund your Christmas expenses, Store cards charged higher than normal rates of interest, which makes it harder to pay them off in full within a reasonable time frame. Despite investigations into the exorbitant rates by the Competition Commission, the stores that offer such credit cards still haven’t lowered their interest rates. When you'receive your store card statement, take note of the amount of interest charged on your purchases for the month and compare it to the minimum payment required. There is probably such a small difference in the two amounts that you will be paying next to nothing on the outstanding balance of your account.

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

Take charge of your finances and if you must use a store card, use it to your advantage. This means that you should make every effort to pay the outstanding balance in full each month to avoid being ripped off by the company and helping it make a profit