Two thirds of personal insolvency cases have involved store credit cards, according to the latest survey of insolvency practitioners by trade body R3.

R3 said that many people who find themselves saddled with unmanageable amounts of credit card debt could have avoided it if they had understood the information they were given.

Nearly 80 per cent of insolvency practitioners said they believed that consumers view spending on store cards as less ‘real’ than spending in cash and so unwittingly go over budget, according to the survey.

R3 President, Peter Sargent, said: "Offering store credit at the point of sale means that many vulnerable consumers do not grasp that they are entering into a legally binding contract. Store cards must be handled just like any other credit card.

Steven Jackson of BeatMyDebt.com agrees. "Many of the people we work with do not see the debts they are building up on store and credit cards as a problem because they are maintaining the minimum payment. This is despite the face that they may be many thousands of pounds in debt" he said.

Better understand required

R3 has also produced a consumer guide on store cards urging people to fully understand the financial product they are entering in to. "This advice guide was designed to make consumers stop and think. We can’t stop people from using store cards but we can show them how to make sure the store card works for them."

In April the Department for Business Innovation and Skills is expected to issue a government response to a credit and store card consultation which examined the re-pricing of existing credit card debt.

The consultation also considered whether credit card providers should ensure that customers repaid the most expensive debt first and urged providers to make information on interest rates as transparent as possible for consumers.