Store card holders paying the penalty

Store cards are costing the British consumer nearly £900 million more in interest than credit cards, according to new research.

A study by uSwitch has determined that using store cards stacks up an additional £892 million of interest in total and have an average APR of 26 per cent, compared to credit cards’ 16 per cent.

Also, figures show that the amount spent on store cards has now reached £2.17 billion.

Mike Naylor, a personal finance expert from uSwitch.com, commented: “People are typically lured into store card ‘deals’ at the checkout because they will get a small discount on the purchase being made.

"In most cases, this discount will be completely negated by the high levels of interest incurred by those who do not pay the balance off in full every month.

"More importantly, a busy checkout in a department store is not the best location to allow people to make an informed financial decision and read the small print before signing up."

The number of store card accounts has gone up from 7 to 13.4 million in the last five years.