Consumers who have used store cards to pay for their Christmas shopping are being advised to transfer outstanding balances to a low-rate loan to minimise interest payments.
According to Alliance & Leicester (A&L), 23 per cent of people have used store credit to fund their festive purchases, although the same amount said they would consider a loan in order to consolidate the debts.
A total of 31 per cent recognised the potential savings they could make if store card balances were repaid via a low-cost loan, with nine per cent agreeing that they plan to do this in the coming 12 months.
Richard Al-Dabbagh, senior personal loans manager at A&L, underlined the hidden costs that may be incurred by store card interest rates, which can be as high as 30 per cent annual percentage rate.
“Some of the offers pushed at us by sales assistants in connection with their store cards can seem really tempting,” he said.
“A low cost personal loan could make borrowing more manageable – or at least make the start of the New Year less of a headache.”
A&L offers a range of financial services, including mortgages and insurance products.
© Adfero Ltd