The Worst Xmas Shopping Rip-Off... Ever! by Finance News Bulletin

Published: 20/11/07

I was in BHS previous this week, shopping for some new furniture and quietly minding my own business As I was sitting on a divan and eyeing up the price-tag, a supermarket assistant came up to me with a big smile on her face "Would you like to take out a amass card today" she asked, completely unaware that she was about to sense the wrath of a small, curly-haired, store-card-loathing dragon, also known as: yours truly

The fact is, this is one of the most stupid questions you could possibly ask a stupid writer "Absolutely not" I told her ferociously, before demanding: "What's the APR"As my boyfriend looked on, uncomfortable and wishing he was in a galaxy far, far absent, she went away to make sure with her manager

That's right, she didn't knowIt was at this point that I started mouthful of air fire It drives me crazy that, unlike a mortgage or an insurance policy, people can sell amass cards without any formal preparation - never mind a recognised qualificationThe APR or Annual Percentage Rate of the average amass card -- and BHS is one of the worst offenders -- is 28

2%, almost twice the rate of a normal praise cardThis means that, if you don't disburse off your bills in full every month, you disburse 282% more than the purchase price - twice as much as you would be charged on a typical credit card, and nearly five era the Bank of England Base speed (the rate at which the Government lends cash to banks)No wonder hundreds of people post on our Dealing With Debt discussion board every year, frantic for advice after racking up thousands of pounds of debt on these swindle cards

Call me cynical, but I suspect that some people are duped into taking out on these cards because the friendly shop assistants who sell them have little thought how much of a stinking rip-off they really areBut am I being a bit unfair here Are these cards actually such a rip-off And if so, what's wrong with them

allow's look at the facts On the face of it, many store cards offer what seem like fantastic discounts and reimbursement For example:Dorothy Perkins: 20% off one transaction every six months, gratis release on orders over £60, entry into monthly prize draws*So far, so good

But let's take a seem at how much I would ‘save' if I took out a store card at Miss Selfridge, bought myself a glossy new Christmas party outfit, and then only made the smallest amount payments on my 28% APR store card:Product Retail cost Purchase cost with 10% discount Total amount salaried over a year Total cost of disburseing byWhen I hand over the card to disburse at the till, I think I am economy £12 with the 10% reduction But as the table shows, the dress would actually end up costing me an additional £3024 on top of the retail cost of £120, just because I used the store card in its place of paying by cashAnd remember, I got a 10% discount with my first buy

If I had then gone back and bought, say, a sequinned party bag, the relative cost of using my certificate would have been even higherWhile I personally avoid them like the plague on code, I should emphasise there's nothing inherently wrong with store cards, as extended as you pay your equilibrium off in full every month You'll get the discounts and the reimbursement, and you won't pay a penny in interestBut if you prefer to ‘buy now, disburse later', these cards are definitely not your best option

in its place, you should opt for a credit card that offers 0% interest on new purchases for say, 12 months That would denote you could bung all your new purchases on a certificate and, as long as you paid the balance off in full before the day was up, you wouldn't be charged any interest (saving you £3024 in this case)If you have any balance outstanding on these cards, I suggest you button over to a 0% balance transfer card immediately

This will make sure you stop paying interest on your balance for a few months, allowing you time to pay off your money owing without racking up punitive charges You will more often than not be charged a small transfer fee, but it should still labor out much cheaper than keeping your equilibrium on a store cardFinally, a utterance of warning It's the start of the Christmas shopping period and, with hundreds of shoppers set to enter their doors over the next six weeks, department food are stepping up their efforts to sell new clientele their rip-off cards

So if a shop helper comes up to you and invites you to take out a store certificate, think very carefully Unless you're 100% certain that you can pay off the equilibrium each month, steer clear© Copyright 1998-2007, The Motley Fool incomplete All rights reserved

This material is for personal use onlyput of Reg: England & Wales Company Reg No: 3736872 storage bin Reg No: 735 7818 01

Registered Office: 30 Great

Visit original article: