The number of people with one or more credit cards has grown at an unbelievable rate in recent years. Like the mobile phone, the credit card has become a way of life for many people, something they’d be lost without.

The offer of a store card for your favourite store can be tempting and may offer opening discounts, invitations to special events (encouraging you to spend money in the store, of course) and the familiar “If you take out the card today, you’ll get 10% off your purchases. It won’t take very long; we can fill the form in now. You may as well take advantage of the offer and get your discount at least.” You know how it goes and yes, there are some things you’d like and the discount is worth thinking about. Before you know what’s happening, you’re giving details of your current account etc., etc., etc.

It’s a familiar scenario. Over 40% of people who sign up in this way had no intention of doing so when they entered the store, according to the Office of Fair Trading, and yet they may well make a major purchase.

This isn’t a problem if you have the money available to clear the balance within the interest free period, which can be from 35 to 55 days, in most cases. However, if you’re unable to meet this time-limit you need to be aware that the interest on the outstanding balance can soon mount up.

The Consumer Credit card act sets down regulations for any loan under £25,000. Whether or not a total overhaul of these rules is necessary is under consideration.

Data provider Moneyfacts provide some enlightening information regarding the variation in store cards interest rates. John Lewis, which includes Waitrose, has an APR of 13% and Marks & Spencer offer 18.9%, whereas Debenhams and Comets Timecard are currently charging 28% and 29.9% respectively.

Before you sign up to one of these cards, take time to consider:

The discount may be a good deal and if there is a purchase that you are seriously considering anyway and you have the money to fund the purchase within the interest free period.

What is the APR rate on this offer? How much will you be charged on the remaining balance?

There may be an interest free period. How long does this last and when it ends, what rate will be charged?

Payment Protection Insurance will be offered. Check how much this is going to cost and what benefits are offered. This is an option but could prove a blessing under some circumstances, such as illness or redundancy. Read the agreement carefully to find out more.

Remember that you’ll need to budget carefully for store card purchases – it’s easy to overspend.

You don’t need to sign there and then. Take the agreement away and check everything, including the interest free period, APR, default and late payment penalties. Ask questions until you’re satisfied you fully understand everything.

The Office of Fair Trading endorses the above advice. They also advise that you compare the store card with other payment methods.

Don’t be hassled into taking out a card you don’t want by some pushy person who doesn’t really care whether or not you’re getting what’s right for you, as long as they get their commission for signing you up!

Remember, as with credit cards, the statements come in monthly. Keep track of your spending. Credit cards with low APR’s are, in general, a better deal than store cards, according to the majority of financial experts.

Take care and weigh up all the options.

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