nigel woollsey

Nigel Woollsey

Online Writer
Published: 11/02/2019

At a glance

  • As with regular credit cards, store cards have a credit limit that you can spend up to and you have to make a minimum payment each month, although you should always try to repay more.
  • Many store cards tend to charge a much higher APR than a credit card, making them an expensive form of borrowing if you don't repay your balance in full each month.
  • Occasionally, the retailer may offer exclusive discounts to cardholders, such as opening the store for 'membership parties' where only cardholders can shop.
  • Any introductory and subsequent cardholder discounts only work if you make the purchase on your store card – you won't get the discount if you decide to pay by cash or another card.

Should you take out a store card?

Store cards are a type of credit card with certain unique characteristics.

While a credit card will allow you to spend anywhere where the card's payment network (Visa, MasterCard, American Express, etc...) is accepted, a store card will only allow you to spend in the shops of a retailer or retail group. But the differences don't end there...

Should you take out a store card?

A store card may be appropriate if:

A store card is not appropriate if:

  • You can pay off your balance in full every month.
  • You will take advantage of any offers that come with the card (for example, membership parties where you get an exclusive discount).
  • You aren't very good at managing credit.
  • You won't be able to pay off the balance in full every month.

Big purchase to make? A 0% purchase credit card may be a better option

If you've got a big purchase coming up that you won't be able to repay for a few months, a store card can be a tempting option.

However, it may be worth considering whether a credit card offering an introductory 0% on purchases would be better before you make a decision – there's no point saving 10% on your purchase, only to pay 20% in interest!

Three golden rules when dealing with store cards

While some cards do offer introductory rates and interest free terms on large spends, you would be wise to follow these golden rules:

1) Pay off the balance in full each month – The APR on store cards can be very, very expensive. You don’t get introductory 0% periods like you do with some credit cards, so it’ important to pay back what you borrow in full, every month.

 

2) Transfer balances – if you’ve got store card balances that aren’t getting repaid, a more cost effective way of repaying would be to transfer your debt to a credit card with a long 0% balance transfer deal. Make sure you cut up your store cards and cancel them once the balance has moved across, to prevent you spending more.

3) Pay by direct debit – Some store card providers charge a higher APR if you choose not to pay by direct debit. Store cards are an expensive way of borrowing as it is, so don’t give card providers an excuse to charge you more!

Pros and cons of store cards

  • Store cards can be a good way of getting a handy discount and, providing you pay the balance back in full each month.
  • They offer an alternative method of payment at your favourite high street retailers.
  • Store cards tend to charge a much higher APR than credit cards.

Moneyfacts tip

Moneyfacts tip nigel woollsey

In the past store cards have been heavily criticised. If you can, do it the old-fashioned way and save up before you buy – that way you won’t have to worry about eye-watering interest rates.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

person using phone to make contactless payment

At a glance

  • As with regular credit cards, store cards have a credit limit that you can spend up to and you have to make a minimum payment each month, although you should always try to repay more.
  • Many store cards tend to charge a much higher APR than a credit card, making them an expensive form of borrowing if you don't repay your balance in full each month.
  • Occasionally, the retailer may offer exclusive discounts to cardholders, such as opening the store for 'membership parties' where only cardholders can shop.
  • Any introductory and subsequent cardholder discounts only work if you make the purchase on your store card – you won't get the discount if you decide to pay by cash or another card.

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