New figures from the Finance and Leasing Association (FLA) released today show store card spending has dropped by 20% in the last year. Total store card lending now stands at £1.8 billion.
The figures, which may be partially attributable to a wider slump in high-street spending, contrast sharply with credit card and personal loan lending, which has declined 2% over the same period. However, total FLA consumer finance lending in August was 3% higher than August last year, and car finance lending was 1% higher than last year.
Which? Money researcher Nicolas Frankcom said: ‘Store cards are a poor quality financial product with huge interest rates and fees attached, so it’s not surprising that people are no longer using them to borrow. Our upcoming report demonstrates how careful you have to be when it comes to these cards.’
Poor discounts, interest and fees
While store cards are often seen as an easy and convenient way to grab a discount, they also come with interest rates of around 29.9% which can quickly wipe out any point-of-sale discounts, particularly if people don’t pay them off.
Our investigation into store cards last year found that this problem was being compounded by poor sales advice from staff and excessive lending that didn’t reflect our fieldworker’s ability to pay back what was being offered.
Alternatives to a store card
Our upcoming report, which you can find in December’s Which? Money magazine, will show you how to use store cards, and what can happen if you don’t budget effectively this Christmas and borrow too much.
Other popular ways of spending include a Best Buy 0% credit card, cashback credit cards, or cashback sites, all of which you can read more about in the Money section of the Which? site.
- Our guide to store cards contains information on our last investigation and your rights.
- Read all about credit cards, including which ones you should consider and what to watch out for
- Get advice on cashback credit cards so you know which ones to consider and what the rates are