Catalogue Debt and Store Cards: Getting Help

How catalogue and store debt works

A catalogue account or store card lets you buy goods now and pay over time. Interest and fees depend on the account, and the rates can be high. Some accounts give you a weekly or monthly minimum payment, others a fixed credit limitCredit limitA credit limit is the maximum amount a lender allows you to borrow on a credit card or similar account.Read more →. Because you can often keep buying until you reach the limit, balances can build quietly. Under the Consumer Credit Act, these are regulated credit agreements, and lenders must treat customers fairly when they are in financial difficulty.

Are they priority or non-priority debts?

Catalogue and store debts are non-priority debtsPriority and Non-Priority Debts ExplainedLearn which UK debts are priority debts, such as rent, council tax and energy bills, which are non-priority, and why the difference matters.Read more →. The consequences of non-payment are real, including defaultsDefaultA default is a record on your credit file showing that you have seriously fallen behind on an agreement, usually after several months of missed payments.Read more →, court action and a poor credit fileHow Credit Scores Work in the UKHow UK credit scores work: what the credit reference agencies record, what affects your score, why scores differ between agencies and what lenders actually see.Read more →, but they are less immediate than losing your home or energy. If you are short of money, rent or mortgage, council tax and energy should come first. See priority and non-priority debts.

Buy now pay later

Buy now pay later products split a purchase into instalments, often without interest if you pay on time. They can feel harmless, but missed payments can bring fees and affect your credit file, and several small plans can add up. Include them in your list of debts and your budget. Rules for these products have been changing, so check the latest guidance from MoneyHelper and the Financial Conduct Authority.

What to do if you are behind

1. List your accounts. Include the balance, minimum payment and any arrears.
2. Do a budget. See what you can afford without cutting priority bills. Use how to make a debt budget.
3. Contact the company. Explain your situation, offer a realistic payment and ask them to freeze interest and charges.
4. Get it in writing. Keep records of any agreement.
5. Get free advice. If you cannot reach agreement, or you have several debts, speak to a free adviser.

Late payments, defaults and court action

If you miss payments, the company will send reminders and charge fees if the terms allow. After several missed payments, they may issue a default noticeDefault Notice for Debt: What It Means and How to Respond (UK)Received a default notice? Find out what it means, the 14-day rule for credit agreements, how to put things right and what happens if you do not.Read more →, which gives you a period to put things right. If the account is defaulted, it is recorded on your credit file for six years. The debt can then be passed to a collection agency or sold to a debt buyer, and in some cases the lender takes court action. See debt collection in the UK for your rights and CCJs explained for what happens if there is a claim.

Common mistakes

• Paying only the minimum for years without reviewing the cost
• Ignoring letters because the amounts seem small
• Taking out new catalogue accounts to cover old ones
• Not checking for old accounts you have forgotten, which may be in arrears
• Not claiming protections if you are in financial difficulty

Formal and informal solutions

If catalogue and store debts are part of a wider problem, a free adviser can look at the options: a debt management plan, a Debt Relief OrderDebt Relief Order (DRO)A Debt Relief Order is a formal solution for people with low income, low debt and few assets. Learn how DROs work, eligibility criteria and what happens to your debts.Read more →, an IVA or bankruptcy. Catalogue debts are unsecured, so they can be included in most solutions. See IVA, DMP, DRO and bankruptcy compared. If your total debts are small and you can afford to repay, direct negotiation may be enough.

Check your rights and the agreement

You have rights under consumer credit law. You can ask for a copy of your agreement, a statement of account and information about charges. If a debt is old, unusual or you do not recognise it, ask for proof before paying. Some old debts are unenforceable or statute-barred in certain situations. See statute-barred debt. A free adviser can help check.

A worked example

Suppose you owe £600 on a catalogue account, with a minimum payment of £30 a month, and £250 on a store card. You also have rent, council tax and energy to pay, and your budget shows £40 spare. A sensible plan is to pay the minimum on both, put what you can on the account with the highest interest and write to each company explaining your situation. If you cannot pay both minimums, offer a smaller payment and ask them to freeze interest. Many companies will accept a reduced payment for a period, particularly if you show a budget. Keep a copy of the agreement and review it every few months.

Spotting forgotten accounts

Old catalogue and store accounts are easy to forget. Check your credit reports for open accounts you do not recognise, and look at old emails and statements. A forgotten account can build arrears and charges. If you find one, ask for a statement and decide how to deal with it. If you do not recognise the debt at all, ask the company to prove it and check it is not a scam or a case of mistaken identity.