Beware the store card and high interest loans

Hackney Trading Standards are warning residents to think carefully before shopping with store cards or taking out high interest loans to pay for Christmas presents.

Store cards can be tempting and most major high street stores offer them. Usually shops give introductory offers when you sign up for a store card, for example 10% off your first purchase (if you pay with the store card).

However the majority of store cards carry high Annual Percentage Rate of Charge (as high as 27.9% APR variable rates). They can be twice the rate of a credit card, which makes repayments very high if you don’t pay off the full amount each month.

Therefore it is important not to feel pressurised into taking a store card in the first instance and if you do get one avoid over using it, as large debts can be ran up quickly.

Taking out a loan can also seem like a good short term solution but people often end up paying back a great deal more than they bargained for. For example, some companies offer loans for between £50-£800 but with an APR of 442%, consumers can end up paying £3500 on an £800 loan.

Cllr Alan Laing, Cabinet Member for Neighbourhoods said: “Trading Standards always recommend that anyone on a low income, considering borrowing money speak to the Credit Union and stay well away from these high interest options.”

For further information about consumer rights contact Hackney Trading Standards on 020 8356 4929 or Consumer Direct 08454 04 05 06