Beware of store cards this Christmas

Words of warning have emerged from a Moneyfacts analyst to beware of opening a store card this Christmas, particularly if you plan to keep a balance on your card.

Often there is an incentive as an introductory offer-for example a discount on your shopping or loyalty schemes or special offers. However beware the interest rates they charge. On average a store card charges interest at roughly 24.6%. This figure is equivalent to four times a personal loan and is 8% higher than an average credit card.

The analyst quotes an example of an average store card with an interest rate of 24.6% and a minimum repayment of 3% (min £5). An initial balance of £500 would take 11years and 10months to repay at a cost of £1,082.98-more than DOUBLE your initial expenditure.

If you plan to sign up for a store card, by all means take advantage of any promotions on offer, but if you think you will not be in a position to pay your balance in full, there are many credit card companies who will accept balance transfers from store cards. By shopping around you should be able to find balance transfers of up to 0% available until January2008 (fee 2%, min £5) or else possibly a lifetime deal as low as 3.9%.

With these deals available, there is certainly no need to be paying extremely high interest rates.