Should you take out a store card? - Credit cards - Guides |

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Should you take out a store card?

Category: Credit cards
Author: Tim Leonard
Updated: 14/06/2018

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 particular retailer or retail group. But the differences don't end there...

How store cards work:

  • As with regular credit cards, store cards have a credit limit that you can spend up to (which may be lower than for a non-store-specific credit card), 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 up 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?

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.

What are the disadvantages 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, offer an alternative method of payment at your favourite high street retailers.

However, store cards have been heavily criticised for the following reasons:


High APRs
You'd think that a store card would offer a lower APR than a credit card because you can only spend it with a single retailer. This is not the case – in fact, the reverse is true.
Store cards tend to charge much higher APRs than credit cards.


Untrained sales staff
Shop assistants have targets to meet for store card sales. They don't take into account whether the product is suitable for you and may not fully explain the product to you before you accept it.
Shop assistants have a financial incentive to sell you a store card.


Easy to apply for
Applications for store cards are quick – we're talking minutes. You don't have time to consider whether you really want one; the whole process, from the suggestion of the sales assistant to the acceptance and first payment on the account, happens while you are in store.
Remember that you have a seven-day cooling off period to cancel the card in if you decide you don't want it.


Young adults and students
The nature of store cards means that they are likely to appeal to vulnerable borrowing groups, such as young adults and students – inexperienced borrowers who are likely to rack up balances on the card and not be able to repay for months, even years.

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

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 (particularly if an introductory discount off your purchase is offered).

Weigh up 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!

Alternatively, you could do it the old-fashioned way and save up before you buy, meaning you won't even have to think about interest.

Three golden rules when dealing with store cards

If you have a store card, or are planning to apply for one, make sure you follow these golden rules:

3 Golden Rules

What next?

Who's the lender – UK store cards?

Compare the best available credit cards

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.