Shopping can be bad for your wealth

The new year is almost upon us, which for many people means only one thing: the January sales. But before you join the throng of shoppers out looking for a bargain, make sure you cut up your store cards because they can officially “damage your wealth”

That is the latest analysis of the Competition Commission, which is threatening to force store card providers to issue cigarette-style warnings on card statements because their interest rates are so exorbitant.

If you own a store card and are not one of the few people diligent enough to pay off your outstanding balance in full each month, then you are more than likely paying an interest rate of around 30 per cent on purchases.

Most credit card companies charge between 10 and 15 per cent, with many offering even better deals to those with good credit records.

Mike Naylor, principal researcher at consumer group Which?, has warned consumers that the interest on store card purchases could wipe out any savings made in the January sales.

“Store cards are an unnecessary and extremely expensive way to borrow,” he said. “We would advise people not to use them - there are much cheaper ways to borrow.”

He also wants consumers to be very sceptical if stores offer their cards when making purchases.

“The solutions the Competition Commission offers are all helpful, but won’t solve the fundamental problem that shoppers will continue to be sold these cards without adequate information about the rates or charges.”