The convenience of having a store card at your favourite store is very enticing. You can buy the items when they come on sale and have everything you need when you want it. There are pitfalls with using store cards that have gotten many consumers into financial difficulty in the past. With today's financial crisis, it is more important than ever before that you be wary of using store cards for your purchases so that you won't become deep in debt. Most of the store cards available have a high rate of interest, often as much as 40% more than that charged by the standard credit card companies



With the current economic downturn, it is very likely that large numbers of consumers are planning to use their store cards to fund their Christmas gift-giving this year. There has been much discussion over the exorbitant rates of interest charged on these credit cards in recent years, so much so that the Competition Commission has investigated the high rates of interest charged to consumers. It has not had any effect, though, in getting the companies to lower their rates

Using a store card can be advantageous, but only if you are able to pay the outstanding balance in full before the interest free period of the statement expires. In this way, you will realize the savings on discounted purchases you made at the store. If you have to make minimum monthly payments, the savings you did realize on the items you bought will be wiped out in the first month. Plus, the cost of the items will be spread out over the number of months it takes you to pay the balance in full, which makes them much more expensive than you first thought. According to a recent report, if you only make the minimum payment on your balance of the store card, you could be paying double for your purchases

Store cards can be advantageous if you pay off the outstanding balance of your account before the interest free period expires. If you can do this, you will not have to pay anything extra for the privilege of using the card to make your purchases. When you intend to use a store card, you should add up the total amount of purchases you make so that you know you are able to pay this amount before the statement due date and not have to incur high interest charges.

When you allow the interest charges to build up on the purchases you made using a store card, it doesn't make any difference whether or not you paid less for the item than you would have at another location. The interest on the balance will wipe out any discounts your received. Paying the monthly payments on the account will actually mean that the items you bought were more expensive when the interest is added to them over time.

If a store card is the only way you will be able to manage your Christmas shopping this year, prepare a budget for the amount that you can afford to spend and pay off before the statement due date. In this way, you can benefit from using the card and avoid the pitfalls associated with it