Store Card Debt
Have you built up store card debt and now find yourself unsure of where to turn? At NDH Financial, we're here to help. We provide financial help through the use of an IVA debt relief solution, designed to help people like you break free from your outstanding debts.
A store card is a type of credit card that is limited for use within a specific store. A store card is used to purchase goods or services from the retailer using credit, paying off what you owe every month. There will usually be a minimum monthly payment, but unless you pay the full amount off, interest will be charged, which can be quite high. This can lead to debt occurring, even if you do pay the minimum payments.
By using credit to purchase from a shop, you essentially borrow money, so it's important to make sure that you will have the funds available to pay off the money owed and keep up with the monthly payments required.
If you require assistance with your store card debt, contact one of our friendly debt advisers today for help and expert advice on how to manage your debt.
May not be suitable in all circumstances.
Fees apply. Your credit rating may be affected.
What Is Store Card Debt?
Store card debt refers to the balance that the borrower has left to pay on their store card, usually applied when the minimum payments haven't been met. If the minimum payments aren't completed each month, you will go into something known as 'store card arrears', with an extra charge usually being applied at this point - these charges will be different depending on the card and retailer.
The interest rate will differ depending on the card you're using - however, it usually ranges between 20% and 30% APR, which can lead to even more debt accruing. The interest is usually a lot higher than when using a standard credit card, so you might be better off using a credit card for any retail purchases, instead of a store card.
What Is Persistent Debt?
If you’ve paid more in interest and fees than you’ve paid off on your store card balance over an 18-month period, you may receive a persistent debt letter from your store card provider. Persistent debt is more likely to occur if you are only making the minimum repayment amount each month. This is because most of this amount goes towards interest and charges, reducing the size of your debt only slightly.
Since September 2018, the Financial Conduct Authority has instructed all lenders to contact customers that are deemed to be in persistent debt. So, if you have received a persistent debt letter, there is no need to panic. The letter is a formality, and our experts will be happy to help you consider your options for debt repayment if you need additional support.
If you're still in persistent debt after 27 months, you'll be contacted again by your card provider to encourage you to pay the debt off.
If, at 36 months, your debt still hasn't been cleared, your card provider should offer you an affordable payment plan to try and pay it off. If a plan isn't actioned, your account may be suspended and this could have an impact on your credit file.
Note, persistent debt can also be built up through credit card debt or catalogue debt.
Can You Write Off Store Card Debt?
Store card debt can be written off, but unless you choose to pay the debt off yourself, you'll need to implement a legally binding debt solution. At NDH Financial, we specialise in IVAs (Individual Voluntary Arrangements) - contact us for a no-obligation consultation call and we'll see if you're eligible for an IVA.
An IVA is a legally binding agreement between yourself and your creditors, usually used if you have more than one type of debt. Instead of paying the debt back all at once, an affordable monthly repayment amount will be chosen, which you need to pay each month to stay within the terms of your IVA.
As an IVA is legally binding, both you and your creditors need to abide by the terms and conditions throughout the process. One major positive of taking out an IVA is that your creditors can't keep contacting you for payments, and your debts will be frozen.
IVAs are usually taken out for a set period of 5 years. Once this time has elapsed, the remaining debt will be written off, so long as the terms and conditions have been adhered to. Our consultants will be with you every step of the journey to help you through the IVA process, and we'll speak to your creditors and distribute the money to them so that you don't have to.
If you're interested in taking out an IVA, contact us today and we'll see if you're eligible. If you decide an IVA isn't right for you, there are several different debt solutions you can go for instead - it's important to read through this information in full so you know you're getting the best option for your situation.
Get in touch with NDH Financial today for a free consultation about your debts.
Call us on 0800 002 9051 or apply below.
How Does Store Card Debt Affect My Credit Score?
Like any other type of debt, store card debt will affect your credit score, so it's important to take action to try and mitigate this. Similar to a credit card, having a store card can actually help your credit rating if you are able to make your payments and pay off the amount you’ve borrowed. However, having store card debt or only making the minimum payments will impact your credit rating negatively, indicating to potential creditors that you're not able to pay your debts.
If payments are missed or you make a late payment, your credit score will be impacted, particularly if you enter a period of persistent debt. If you're worried about store card debt harming your credit score, there are several things you can do to mitigate this:
- Make sure you don't miss your payments - By keeping up with your monthly payments, you can avoid your credit history being affected.
- Try and pay more than the minimum - Paying the minimum amount required will keep the debt collectors at bay - however, this will still affect your credit history, and you may enter persistent debt after 18 months of doing so.
- Check you have enough money to cover what you buy - Before buying anything with a store card, make sure you have enough money saved or enough money entering your bank account to be able to pay for it when your statement is due.
What Happens to My Store Card Debt After 6 Years?
If you're living in the UK, there is a statute of limitations on how long your creditors can chase you for debt. For most debts, this is 6 years from when they last contacted you or when you last made a payment.
With store card debt, your creditors should contact you three times - the first time will be after 18 months, the second time after 27 months and the last time after 36 months. They'll usually ask you to set up a repayment plan - if this happens, you need to make sure this is affordable for you.
If you find you are unable to pay your debt 5 years after being contacted, you should speak to your creditors to find out what your options are. This will depend on the amount of debt you have, your current situation, and who your creditors are. After assessing your unique circumstances, they may be able to implement a revised payment plan to what was originally proposed, or even freeze your debts.
Get Started with Paying Your Store Card Debt Off Today
At NDH Financial, our Insolvency Practitioner has over 15 years experience helping people with their debt, helping thousands of people to break free from the shackles of debt over the time we’ve been in business. Our friendly team understand that anyone can fall into the trappings of debt, providing tailored solutions with a friendly face to those who need it.
As a personal insolvency specialist, with our own in house Insolvency Practitioner, we're trained to help you find an appropriate solution for your debt, specialising in IVAs, making us perfectly equipped to help you beat your store card debt. There are many benefits to taking out an IVA, particularly if you have several creditors that you owe money to.
Get in touch today for a no obligation consultation call, and we'll do the rest of the work!
Do You Have Any More Questions?
Our IVA Learning Hub Can Help
We know you might have questions and that’s fine.
We can answer most of those on our call.
But we’ve also built our learning hub so that you can learn more about an IVA and see if one is right for you.
Click below to check it out.