Things to be wary of:

Most store card agreements have variable interest rates. This means that they could go up or down. If the interest rate rises and you continue to make the same minimum monthly repayment, it will take you longer to pay off the debt.

Your lender may offer you payment protection insurance to cover your repayments in the event of unemployment, sickness, etc. The premium is normally added to your account on a monthly basis, and is generally calculated as a percentage of your outstanding balance. You should be aware that if you opt to purchase this insurance and still only make the minimum monthly repayment, it would still take you longer to pay off the debt.

Although the agreement will specify a minimum monthly repayment, it is open to you to pay more each month if you wish. This will reduce the length of time it takes to pay off the debt. However, if you are paying by direct debit you will have to contact the lender to arrange this.

You may find that it is some time before you receive a statement of account. This may make it difficult for you to keep track of how much the agreement is costing you.

The way in which store cards are marketed differs to that from conventional credit agreements. Sales assistants will be far more proactive in offering the cards to you at the point of sale, often with apparent incentives such as a saving of ten percent on the day – obviously, if you are not in the habit of settling your bill in full upon arrival, the disadvantages far outweigh the benefits. Though it is not disclosed, the sales assistants are often on commission to offer this benefit and the credit may be extended to customers who would not qualify for a credit card.

Some consumer groups are concerned about the way in which stores retain and utilise the information they collect about customers, and how they can build up a profile of your shopping tastes and preferences.

What should I consider?

Do not be misled by any verbal statements made by the sales staff, particularly in regard to the number of repayments you will have to make and how much the agreement will cost you. Ask for a written quotation.

Consider whether this type of agreement is best suited to your needs. Ask about the other forms of credit which are available, such as interest free credit, personal loans, etc. Are any of these better for you?

Whatever you decide, read the agreement before you sign it and make sure you know to what you are committed.

Though the agreement is not regarded as credit, for the purposes of transparency, a default will still make it on to your credit report, so you should seriously consider your obligations.