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Women, fashion and debt

If you’re a die-hard shopaholic, you’re not alone — four million British women say that over 50% of their debts are due to fashion purchases.

Recession spending has made women particularly vulnerable as they attest that they shop to forget their financial woes. Combine that with a desire to have the latest luxury item — even if you have to hire it — and fashion debt becomes inevitable.

Before you whip out your store card or credit card, ask yourself the following questions:

  • Must I have the latest fashion item? Yes, the shops say it will sell out quickly; yes, you can put it on your store card — but do you really need it? Clothes and shoes depreciate in value — and anyway, true fashion is timeless.
  • Do I really need a brand-name item? Is the product actually better than any other, or are you just paying for advertising and hype?
  • Am I abusing my store card? While you may get 55 days interest free, store cards charge interest at a much higher rate than prime — you could be looking at as much as 24%. “Buy now, pay later” suddenly doesn’t look like such a good idea.

    Tips

  • Reduce your credit limit. Remember, you can negotiate how much credit you have on your card — rather act responsibly and stick to the minimum balance. If you have your credit limit reduced, this must be confirmed in writing and signed by both consumer and credit provider.
  • Pay cash or use your debit card rather than a credit card. For obvious reasons, it’s better to spend money you have than money you don’t have.
  • Monthly repayments may be low, but calculate the total cost of an item. Take a calculator with you and work out the interest, if necessary. That way, you’ll know what you can afford — and what you definitely can’t.
  • According to Rajeen Devpruth, a senior supervisor at the National Credit Regulator (NCR), in terms of the National Credit Act, interest that can be charged on a store card is the repo rate x 2,2 + 10% = 24,30%. You cannot be charged more than this.

Read more news, blogs, tips and Q&As in our Smart Money section. Post questions on the site for independent and researched information.

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