Store cards are something that many people know about, but few people actually understand. These cards should often be handled with care and caution, because they can easily lead to debt and financial problems if they’re used incorrectly. Although store cards can be very useful in certain circumstances, particularly if you are sure that you’re disciplined enough to pay back the money that you owe, they can also be very dangerous and expensive.
The most important thing to remember about store cards is that it’s usually a good idea to look around at the other financial options that are available to you, and find out whether there are more effective credit options out there.
How do Store Cards Work?
A store card is basically a kind of credit card that you can only use in connection with certain high street groups or chains. A lot like a standard credit card, you can use these simple financial solutions to buy things using credit, rather than actual cash. This means that you can gradually pay the bill off, or wait to pay it off until the end of the month.
Although this can seem very useful, it’s worth remembering that a store card, just like a standard credit card, comes with interest that will be charged to your account if you don’t pay off the minimum amount on time. These interest rates are often much higher than they are on standard credit cards.
There are a wide range of different companies and high-street brands around the world today that will offer you a store credit card or store card when you shop with them. These cards often come with exciting introductory deals, such as a certain percentage off your purchase for so many months, or a great initial discount. Some even come with money-off vouchers and reductions when you buy online. To get a store credit card, you will need to be at least 18, and you’ll also have to have a credit check.
The Benefits of Store Credit Cards
The benefits of store credit cards are pretty obvious. They’re convenient and easy to use, and they’re a great way to save money on your purchases if you buy quite a lot from a particular store or brand. Many store cards come with freebies and discounts that include money-off vouchers, occasional discounts, and introductory benefits. However, it’s important to remember that if you don’t pay off the amount you owe on your card, the resulting interest could add up to a lot more than what the introductory benefits and discounts are actually worth.
Most of the time, the only reason you should consider taking out a store credit card is if you spend a lot of time with the store in question, and often spend a lot of money there. Even in these cases, it’s important to make sure that you’re completely in control of your spending and you have no problems with paying back what you borrow each month. You might consider setting an arrangement to pay your bill by direct debit to ensure that you never forget one of your payments.
The Problems with Store Cards
The problem with store credit cards is that they often come with very high interest rates that can put you in a very dangerous position if you’re unable to pay off the money you owe on time. You can also only use your store card to pay for things within a particular high-street chain.
These cards are typically sold by assistants within the store, rather than financial advisors. However, the truth is that you should always get plenty of information about how a credit card works before you sign up for something. Most sales assistants don’t have the right amount of training to give you the guidance you need, and this could mean that you end up getting into trouble.
Before you Get a Store Card
Even if you feel confident that you can pay your store card bills each month, you should think very carefully before you make the decision to take out a store card. For instance, you might want to think about comparing the benefits you would get with a store card with the discounts and benefits of cash-back credit cards, which generally give a lot more flexibility.
Store cards tend to charge much more interest than average credit cards. Before you sign up, make sure that you look at the APR, as this will help you to compare the various costs of your card with other ways that you can borrow. To avoid paying too much interest, your aim should be to pay off as much of your bill as you can each month. Your statement should be able to give you an insight into the minimum amount you need to pay, but if you stick to this amount your debt will take longer to pay off.