Beware the Shopping Mall Monster
by Colin Mc Caig
colin@cmcaig.com
Like me, you've probably been offered a fair old number of these by
now...
...and, if you're like most people, chances are you maybe own at least
one or two.
They always seem to put in an appearance at just the right (or wrong)
moment...
It might be Saturday and you've just seen the clothing item of your
dreams.
That can be a pain, though, if you're a little short on cash for that
week.
You're undecided.
Until, that is, you're offered...
...a store card.
One of the horrible ironies about store cards is that the majority
of people who sign up for one actually had no intention of making a
purchase before they left the house.
But if you're caught in the above situation, the convenience factor
frequently wins the day, doesn't it? Add on top of this all the little
goodies thrown in as a sweetener...
An introductory discount on goods - typically around the 10% mark -
extra money off during sales periods etc...
But let me tell you what the sales assistant probably won't...
For starters, many department stores will currently charge you anything
up to 30% interest on that little card they offer you (yes, even those
ones with the pretty pictures.)
That's around double the interest of your standard credit card!
Sound scandalous?
Well, hang around... it gets a lot worse.
Here are just a few of the pitfalls to look out for the next time you're
offered a store card...
· Buy now, pay within the next three months. Sure...great deal
if you do actually manage to pay it off within that time. If not, some
stores will charge you interest from the first day you bought!
· Ask questions. In a recent study, it was found that in one
third of cases, information on the interest rate on the card (among
other things) was not freely available.
· Don't be tempted to take out expensive and often useless insurance.
This can be a monthly amount of 1.5%. With interest repayments of 30%,
you could end up with an
annual rate of 56%!
· Also, steer clear of any payment protection insurance scheme.
If you were to lose your job or couldn't work due to illness or accident,
you'll find that this 'insurance' generally only pays the minimum monthly
payment, not the whole balance!
· Be on your guard. Staff will usually ask you to fill in the
application form in store. In many cases the insurance box will already
have been ticked and you will simply be asked to sign up for insurance.
· Study the terms and conditions carefully in the store. Staff
have been known to refuse customers to take away the form. In fact,
a recent survey showed that only 23% were allowed to do so.
You'll often find that if you want all the immediate benefits, you
have to take the card straight away. Not the greatest idea when you
want to weigh up the pros and cons
that come with a financial commitment.
Probably the worst thing about store cards is that it's very easy to
build up an array of them so that, before you know it, there seems to
be more of them in your wallet than
there are coat hangars in your wardrobe.
And in what seems like no time at all...
... you've just spent way, way beyond your means!
If you feel you must buy on credit why not use a credit card with a
low or even 0% rate? After all, if you're going to have debts, you may
as well make them cheap ones!
A store card might seem handy and convenient but they generally come
with a horrendous hidden cost.
So next time you're a tempted to take on another piece of plastic,
make sure you get all the facts up front.
Your bank balance might just thank you for it.
Copyright © 2004 by Colin McCaig colin@cmcaig.com
Colin Mc Caig is dedicated to helping others become
debt free.
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