Ruth Maxwell, Social Media Editor
Ah Fresher’s week. The start of a new year ‘up in Belfast’, signalled by a new fuller healthy back balance thanks to Student Loans, and so many promotions on offer, tempting students to part with their student loan.
Victoria Square & Castlecourt students nights are soon upon us, and no doubt stores will be promoting their store cards. Store cards are essentially a credit card, but can only be used in that store.
A study by Mintel showed that 17% of NI consumers have a store card, with the average consumer being a woman aged 18-24.
We hypothetically put £100 on each store card, and worked out how much the minimum repayments would be per month, additional interest and how long it would take to clear off – It might make you think twice.
Topshop / Topman
10% discount for students all year around.
Store Card: Receive a £5 off voucher when you take out a card to use on a spend of £50+, second purchase allows for 15% off voucher when the spend is £80+.
Interest: 19.9% APR – fees and interest + 1% of the remaining balance.
In a Nutshell: It would take 2 years to clear on a minimum £5 monthly payment and cost an extra £20.11 in interest.
Total repayment: £120.11
10% discount for students all year around
Store Card: 20% off second purchase
Interest: No interest for the first 56 days. 28.9% APR – 3.65% minimum
In a Nutshell: It would take 26 months to clear on a minimum £5 monthly payment and cost an extra £25.74 in interest.
Total repayment: £125.74
No student discount
Account Card: 10% off first purchase.
Interest: Very offered a number of different options to pay. One is “Take 3” which allows you to break the payment of an item over 3 months interest free. Should you not pay for the item over 3 months, the interest is between 39.9 – 49.9% APR.
In a nutshell: It would take 32 months to clear on a minimum payment of 7% (starting at £7 per month), costing £67.77 in interest
Total cost – £67.77.
The secret to managing a store card? Only rely on them if you really need it. Grabbing initial offers may not work out in the long run, not to mention paying back for this years clothes next year, or the year after.
Remember, minimum payment only on a store card can affect your credit rating. Missing a payment or defaulting on a direct debit costs on average £12 in fines. Most stores will be happy to increase your limit, provided you are making minimum repayments. It’s worth remembering that credit limits are not a target, but what you have been provided with. Be smart, work out if and when you will be repaying your store card. That bargain dress or jeans may not have the same feeling if you end up paying an extra £20 in interest.
Check out this handy online calculator http://www.whatsthecost.com/creditcard – it helps work out the cost of APR and minimum repayments.