Those looking to borrow money should avoid using store cards, a finance expert has claimed.

According to James Falla, managing director of Thomas Charles, the form of credit is one of the most expensive around. And as such he advised consumers against taking out the product. He suggested that despite the impact of the credit crunch reducing the availability of borrowing as a whole, accessibility to store cards “hasn’t changed at the moment massively”.

However, he claimed: “Think very, very carefully about what you then intend to do regarding paying off the balance, because if you don’t intend to pay that balance off straight away or at the end of the month you’re probably then facing one of the most expensive forms of credit.”

Mr Falla added: “My advice 100 per cent is don’t take out a store card full stop. Store cards are probably the most expensive form of credit that anyone can consider.” Mr Falla pointed out that the typical store card charges an annual percentage rate (APR) of interest of 29 per cent, a figure he claimed is “very, very high”.

And in struggling with debts accrued on store cards, it is possible that consumers could develop difficulty in meeting the various other demands on their spending, in areas ranging from personal loans and credit card to utility bills and rent costs.

In addition, he stated that many consumers are coerced into getting a store card at till points in stores as the “classic sales technique is: ‘Do you want ten per cent off your purchase today?’”. Mr Falla stated that this is something that is likely to appeal to customers, although to qualify for the discount they are required to take out the borrowing product. However one way, he suggested, to avoid coming under unnecessary financial strain was to get a store card and the introductory discount it offers only to cut up the card before using it again.

Mr Falla’s comments come after a recent study conducted by price comparison website uSwitch revealed that during the past five years the number of store card accounts has surged from seven million to currently stand at 13.4 million. Meanwhile, the amount of money owed on such borrowing products is 2.17 billion pounds. Furthermore, the average APR charged on a store card is some 26 per cent. In comparison, interest on the typical credit card is 16 per cent.

However, those looking for an even more cost-effective borrowing product may wish to take out a cheap personal loan. In using such a loan as a means of debt consolidation, borrowers may be able to converge a number of constraints on their spending, including expensive credit and store card bills, into a single low-cost repayment. In turn this may leave them with more disposable income at the end of each month. Earlier this year, Rachel Lacey, editor of Moneywise, stated that teaching people about financial products and debt at a young age could encourage them to be more confident when managing money in later life. Following on from such guidance, it may be possible that consumers are able to select a cheap UK loan with greater effectiveness.

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