Monday, March 8, 2010
Category:
Personal Finance Tips
A survey conducted by R3 has revealed that 66 percent of the insolvency trade body’s members have dealt with cases where people have taken on a store card ‘without understanding what they had let themselves in for’.
Furthermore, it has been revealed that 78 percent of insolvency practitioners are of the opinion that consumers do not view store card spending as being as ‘real’ as utilising cash. For this reason, it is thought that shoppers unintentionally go over budget.
Therefore, R3 has issued an advice guide for consumers regarding store cards. The guide is intended to assist consumers in getting the most from store cards, whilst avoiding getting into financial difficulties.Additionally, R3 has reportedly called for a ban on ‘irresponsible practice of allowing financially unqualified shop staff selling store cards’.
Peter Sargent, R3 President, said: "Offering store credit at the point of sale means that many vulnerable consumers do not grasp that they are entering into a legally binding contract. Store cards must be handled just like any other credit card. This advice guide was designed to make consumers stop and think. We can't stop people from using store cards but we can show them how to make sure the store card works for them."
R3 advises consumers to take the following action before signing up for a store card:
- Take time to read the application form ‘at your leisure’ by taking it away, rather than feeling under pressure to sign it immediately.
- Enquire as to whether or not there is an interest-free period, and confirm what the rate will be following this period.
- Be sure to check what the default and late payment charges are.
- Bear in mind that lower repayments mean a longer repayment period, which equates to a greater overall repayment. In some instances, the minimum repayment will only be covering the interest.
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Homeowners who have accumulated a number of store cards or credit cards could consider taking out a secured loan to tie these up into one manageable monthly repayment. One of many finance options available, a secured loan for
consolidation could leave borrowers with a single monthly repayment as opposed to juggling several. Furthermore, this monthly repayment could even be lower than the sum of current outgoings – thereby releasing extra money each month. However, if opting for a secured loan to consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
