Are Store Cards Really Worth It?

A store card is merely another type of a credit card with some differences:

• You can use a store card only in a shop or a chain of shops that are owned by one company


• You can use the store card to make purchases online, at the store's website

Both types of cards:

• Allow you to buy now, pay later


• Charge some interest on the deferred payment


• Offer incentives

However, store card users often don't even realize they are being taken for a ride.

The Advantages of a Store Card
If your credit history is good, then you may stand to gain some benefits using a store card. Initially, you may be tempted to accept a store card because you might be given some discount on your purchases, usually, 10%. If you pay off your outstanding every month, regularly, then you may get other benefits in the form of discounts or first previews of new merchandise. However, there is an ugly side to store cards about which most consumers are unaware.

The Disadvantages of Store Cards

• The APR is often double the rate offered on regular cards. Regular credit cards offer interest rates between 8 - 20%. Store cards might sometimes charge a shocking 30% rate of interest.


• Store cards often come with an insurance policy which can be expensive


• Regular credit cards normally offer an interest free period during which you can pay off your debts without paying another penny as interest. Store cards may not offer such an interest free period. This means that, the moment you make a purchase your interest rate starts. Imagine the amount of interest you would pay if you don't clear your balances every month.


• A Competition Commission study revealed that the Britons pay an extra ?100 million a year due to the high interest rates charged by store cards


• Most store cards also charge a high late payment fee.

Managing Store Cards for Clear Gains
You need to take certain steps if you wish to benefit from using your store card:

• Clear your balances every month, without fail


• Read the fine print and see the amount of interest you will be paying on your card


• Select a store card that offers the same APR as a regular
  . If you do your research, you will find some store cards do offer more reasonable rates of interest.


• Some store cards also offer an interest free period so they are certainly more attractive than other store cards that offer no such interest free periods


• Select store cards from shops that you actually frequent. There is no point in getting a store card from a shop located at the other end of town.