One of the first and easiest ways to dabble in debt is by getting involved with store account cards. Stores offer account cards to consumers on a daily basis to try and get them to sign up and buy products and clothing on their accounts. These account cards often offer loyalty points or specials as rewards for shopping which trick consumers into signing up.
Store cards, like credit cards, are one of the biggest debt devils in the credit industry. It provides a consumer with a credit facility that can only be used in the store and carries very high interest rates. These cards lure consumers in with special offers and reward programs, but these programs are designed to encourage the consumer to spend more credit than they ought to, simply to earn the reward.
When paying off debt, consumers should close store card accounts as soon as possible. These cards may allow a consumer to buy clothes, or the occasional expensive home item, but it is better that consumers save up instead of incurring debt to afford these items. Unlike a mortgage, vehicle finance, or even a credit card – store accounts carry no real value for the consumer. It only makes a consumer pay R300 for a R200 shirt that will be thrown out before the account is paid off.
Paying off debt starts with small accounts, as it feeds the motivation of a consumer to pay off bigger debts, and store accounts are the perfect place to start. A smart consumer does not have store accounts and prefers to make their money work in other sectors such as savings, investments and property.
Store cards are also easier to procure than other means of credit, and as such young consumers are often lured in by these cards as it is the first time they will be able to afford items that these stores stock.
Closing store card accounts remains one of the best methods to begin paying off debt and actually have a marked improvement on your credit history.