Shoppers advised to use personal loans not credit cards

Shoppers are being encouraged to take out a personal loan instead of using store and credit cards.

08:33 22 December 2004

Shoppers are being encouraged to take out a personal loan instead of using store and credit cards.

Research by the Yorkshire Bank found that instead getting a bargain, customers taking advantage of offers during the sale season actually end paying a significant price if they do not realise the real costs behind the different ways they choose to fund their purchases.

This is especially problematic as many shoppers plan to buy expensive "big-ticket" items such as a new kitchen (23 per cent) or bathroom suite (16 per cent) and many plan to put the cost onto credit or store cards or use shop finance packages.

Yet of the people polled six out of ten people (59 per cent) admitted they are unable to pay off their store card each month, with the result that the longer they take to pay for their sales bargain, the more it actually costs them.

Gary Lumby, Yorkshire Bank's head of personal financial services, said: "If you do not have a budget in mind before hitting the sales then the 'spend now, worry later' mentality can prove extremely expensive.

"Store cards can be ideal for shoppers who can meet their monthly bills. However, if you can't and the high rates of interest start kicking in, they can prove real problems with some shoppers paying far more for products than they originally were before the sales."

He stressed that for many purchasers a loan is the best and cheapest way to buy expensive items in the sale without causing problems in the future.