Store Card Debt Scotland – Advice
Store Card Debt Scotland – Advice
Table of Contents
What Is Store Card Debt?
A store card works in a very similar way to a credit card, however it only authorises you to purchase goods from the store that issued the card. This facility allows you to buy now and pay later or to pay for your goods in instalments.
Store cards are notoriously dangerous, since the cards are usually issued from a store the customer enjoys shopping at. This can make people think that they have been given ‘free money’, with the optimistic view that they’ll just pay it off later. Obviously some people will be disciplined and will pay it off, however for many, the balance will grow and grow until just the minimum payment becomes an issue.
How Do People Get in Debt to Store Cards?
Many store cards will offer an incentive to the consumer, often in the form of a discount (10% off your first purchase etc.), periodic vouchers or access to special discount events.
This can make the card appear to be a cost-effective way of making purchases and to an individual that takes advantage of the offers, but then pays their balance immediately, it can be.
However, interest rates that are often higher than that of equivalent credit cards (20-30%), means that, to the person who doesn’t pay immediately, it can be anything but cost effective.
Store cards can be incredibly risky:
- They can be very tempting to use when ‘impulse buying’. Meaning that debt can quickly mount up.
- Store cards will often begin with a small limit, but this can increase with use, allowing the customer to run up large debts with high interest.
- Store cards are often promoted at the till point with very little information given about interest rates and other terms and conditions.
Don't Struggle With Debt
Can I Just Make a Minimum Payment?
Like credit cards, all store cards will have a minimum payment that you can make every month. This can be helpful for those months when cash is a little short, but they will often cover your monthly interest and pay a very small amount of the account balance. This means that your balance will take a very long time to pay in full.
The FCA (Financial Conduct Authority) states that creditors must now identify accounts that are in ‘Persistent Debt’. This means you have only been making minimum payments for 18 months. At this point your creditor is obliged to contact you to encourage you to begin making larger payments to help clear your debt. Your creditor will also contact you as follows:
After 27 Months
After this timeframe, if you have not already taken action against your debt, your creditors will contact you, encouraging you to do so.
After 36 Months
If you still haven’t taken action against your debt after 36 months, then your creditor will contact you offering you a method of paying the debt off within 3-4 years. This may take the form of a payment plan, loan or credit card. If these options are not suitable then they may consider suspending the interest on your account, making it easier to pay off the balance.
If your debt has reached this stage, then your credit history will almost certainly have been affected.
What Happens if I Fall Behind with My Payments?
If you fail to make at least minimum payments on your account then charges will often be applied to the account, if this continues, then the account will default. When this happens, legal action may be taken or the debt may be sold to a debt collection agency.
How Can I Get Store Card Debt Help?
If you are having trouble paying your Store Card bills or if you have other unsecured debts that are beginning to get out of control, then the following solutions may be right for you:
Contact TrustDeed4Me for help. We can help you begin to get your life back on track.
Trust Deeds are solely available to residents of Scotland. If you are a resident of England, Wales or Northern Ireland, then visit our sister site IVA4Me.co.uk to find out about Store Card Debt Help.