Is it Ever Worth Choosing a Store Card?

By R. Charlton
Over recent years many stores have started offering their own form of credit cards, known as store cards. Store cards are a kind of 'credit' card with a few key differences.

A store card can only be used in a particular store or chain of stores depending on which card you have. Store cards cannot be used to make cash withdrawals, and interest rates associated with store cards can be very high.

These limitations make store cards a very restrictive form of credit, and although store cards offer discounts on products that are sold by that particular retailer or chain this is often designed to play on consumer's tendency to impulse buy.

For instance, you may walk into a shop and sign up for a store card to get money off an item – landing up with credit (or debt) that you would not have taken out at all if it wasn’t for the lure of a discount. Once you’ve taken out the store card credit you are then restricted in it's use to purchasing items from that store or chain only - when in fact you may be able to get the same or similar products at a lower price elsewhere.

A major disadvantage of store cards is that they can prove to be very expensive forms of credit for anyone who does not repay their balance in full each month due to the often dizzyingly high rates of interest charged. It can be easy to get carried away with a store card, especially as many people do not view the credit lend as seriously as they would their bank’s credit card. Due to the extortionate rates of interest many people soon find themselves with debts to repay on multiple cards with very little to show for it.

Although it is not always advisable to use credit cards for cash withdrawals due to the charges that are applied - you at least have the option should an emergency arise. However, with a store card the best you will be able to do in a financial emergency is hotfoot it to the shops and buy yourself a new outfit or electrical gadget depending on which store card you have!

The interest rates charged on store cards can vary, but are typically far higher than many credit cards.

Anyone who is not that great with his or her finances really ought to be avoiding spending too much on credit anyway. If you have a poor credit history think about ways to improve your credit score, such as using a poor credit history credit card and keeping your debts repaid.

If you have a good credit rating you could fare far better by opting for a retail reward credit card – you’ll get shopping rewards on your spending and the luxury of a credit card that can be used anywhere and that won’t charge you an arm and a leg if you don’t manage to clear your spending in full.

R. Charlton, award-winning writer, shares her financial expertise as a contributing columnist for Credit Card Comparison Online - compare credit cards, where you can compare retail reward credit cards or compare bad credit rating credit cards

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