Store Card Debt

Many high street stores have store cards that allow the user to buy goods on credit. These cards can only be used in the store or store group that had issued them. Store cards differ to store-linked credit cards; consumers can use store-linked credit cards anywhere. There are benefits to store cards; however, there are also disadvantages to owning one.

Penalties and charges

Store cards have higher than average interest rates; the average interest rate is 25-30% APR. A normal credit card has an average interest rate of 15-20% APR. Stores add late payment charges whenever customers pay their bills late.

Debt collecting procedure

Companies will contact the debtors who default to find out how soon they can make a payment on the overdue debt.
Most companies have procedures that guide them on how to collect unpaid debt. They may start with a call or a letter to remind the customer about the overdue debt.

The company may eventually apply for a county judgment if the consumer neglects or fails to pay the debts. This stays on record for 6 years and will damage the consumer’s credit profile.

Debt laws

The government protects consumers with credit laws such as the Consumer Credit Act 1974 and the Consumer Credit Act 2006.
The Consumer Credit Act 1974 applies to debts that are less than £25,000. The Consumer Credit Act 2006 is an amendment to the first Act and includes amounts exceeding £25,000. The Office of Fair Trading enforces consumer protection and encourages competition among businesses.

Remedies

Consumers should contact their creditors before the debt gets too much. They should try to negotiate a lower interest rate or an extended payment period. Failing that, consumers can contact one of the government agencies to help them.