Money tip #119 – Don’t take out store cards

2 min Read Published: 27 Dec 2010

Christmas is over and you're about to hit the sales. But one thing is for certain, when you go to buy that designer dress you are guaranteed to hear the phrase 'hello madam, would you be interested in taking out one of our store cards and getting 20% off today?'' This is often swiftly followed by the worst (and most irresponsible) sales pitch in the world which often uses phrases like 'no-brainer' and 'it's free money, you may as well'' - yet never mentions the long term costs of credit.

Extortionate interest rates

Store cards are a hideously expensive means of obtaining credit, often with annual interest rates as high as 30%. The stores hook shoppers in by offering tempting introductory discounts once the shopper signs up. But in general store cards are a bad deal for consumers, yet a huge money spinner for the banks and retailers.

Below is a table detailing the comparable extortaionate interest rates of a number of stores:

Store card APR (if you pay by direct debit) APR (if you don't pay by direct debit)
&MORE Chargecard - Marks & Spencer Money 23.90% 23.90%
Allders Store Card - Creation Financial Services 26.80% 29.80%
Argos - Home Retail Group 29.90% 29.90%
B&Q Account Card - HFC Bank 23.90% 23.90%
Brantano Store Card - Creation Financial Services 27.80% 30.90%
Burton — Santander 29.90% 29.90%
Debenhams — Santander 19.90% 19.90%
Dorothy Perkins — Santander 29.90% 29.90%
Edge Card — Santander 29.90% 29.90%
Evans — Santander 29.90% 29.90%
Fortnum & Mason - Fortnum & Mason Plc 15.30% 15.30%
Homebase - Home Retail Group 29.90% 29.90%
House of Fraser Recognition Account Card - Santander 19.90% 19.90%
Karen Millen - Ikano Financial Services 28.90% 28.90%
Laura Ashley — Santander 19.90% 19.90%
M&Co. Store Card - Creation Financial Services 24.90% 24.90%
Miss Selfridge — Santander 28.00% 29.90%
New Look Card - Ikano Financial Services 28.90% 28.90%
Oasis VIP - Ikano Financial Services 28.90% 28.90%
Outfit — Santander 29.90% 29.90%
Quiz Store Card - Creation Financial Services 27.80% 30.90%
Russell & Bromley — Santander 23.90% 23.90%
Selfridges Store Card - Creation Financial Services 27.70% 27.70%
Topshop/Topman — Santander 19.90% 19.90%
USC Store Card - Creation Financial Services 27.80% 30.90%
Wallis — Santander 29.90% 29.90%
Warehouse Card - Ikano Financial Services 27.40% 29.90%

Source: Moneyfacts

And it's not just interest rates where they get you?

Santander which issues store cards for House of Fraser, Debenhams, Laura Ashley and a string of other High Street chains has written to customers to inform them that their terms and conditions have changed. Santander have added a new clause to their small print which allows them to charge customers a £10 fee if they do not use their store card for 6 months.

The introduction of this new fee aims to make money out of those people who take out store cards for the initial discount and then never use them – which is something the banks don’t like as they don’t make any money if you refuse to use your new card. While these shoppers may think that they are being prudent, in fact, they are the most likely to be hit by this new charge. So remember, when you are 'checking out the sales’ just say no when it comes to store cards.

(Image: Idea go /