Store Cards

A Store Card is a type of credit card which is provided to you by a particular store or company, which you can use in their stores or in a group of stores owned by their parent company. Some store cards are supported by a traditional credit card company and can therefore be used in any shop, supermarket or garage (or anywhere that you can make a payment using a credit card).

Store cards are advantageous because they enable you to benefit from offers, gifts and discounts not available to non-cardholders. Often owning a store card will automatically gain you membership of the store's club; club members typically receive regular newsletters detailing promotions, new product ranges and cardholder discounts. Companies tend to have regular deals available exclusively to cardholders. You may also earn reward points when you spend, perhaps one point for every ten pounds charged to your store card. You will usually be given a booklet detailing the free gifts that these points can buy, or you will be able to use the points to qualify for a discount on items you purchase in the future.

However, store cards typically have a higher interest rate than regular credit cards: some even double the rate of a standard credit card! This means that if you do not pay back the full outstanding balance each month, over time you will pay back substantially more for purchases made on your store card. Store cards are typically offered to you when you make a purchase in store; companies try to entice you to sign up for a store card by offering a discount on the items you are buying, or offering you a gift. The cashier will usually be paid commission if he or she is successful in selling you the store's credit card. This encourages them to use hard-sell techniques to make the store card seem more appealing and advantageous than it actually is. Make sure that you want the store card and do not merely feel pressurised into signing up.

You will not automatically be given a store card: the company will need to do a background check first, and approve you for credit. This background check, which takes into account personal details such as your credit history, will also determine the credit limit you are given on the store card. You will often be sent the store card within ten days of your in-store application, at which point you will be able to begin using the card. If your application is refused, you will be notified and will not be sent the card. Any discount that you were offered on your purchases if you applied for the store card will no longer be valid, because the application was not approved: you will usually be asked to pay the full price for your purchases.

You may wish to use the store card only to benefit from promotional offers, to save money on your purchases and to earn reward points. If you are conscientious and pay any outstanding balance in full each month to avoid the high interest charge, a store card can offer worthwhile benefits, especially if you tend to make regular purchases in a particular store, or chain of stores. You should be prepared to manage store credit cards carefully however, if you wish to avoid debt.