Store cards offer us the opportunity to buy items from shops without paying for them immediately. They work in a similar way to a credit card where you use the card to pay, then will get sent a bill after a while to give you the option to repay the full balance or a minimum amount. If you repay less than the full balance you will be charged interest on it. There are advantages and disadvantages to using a store card.
Offers from the store
As a store card holder you will often get offers form the store which are exclusive to card holders. This might be a sale preview evening, special discounts or things like this. This can be great as you will be able to save money compared with those that do not have a card. Often new card holders will get the best offers, but you will probably find that there are some advantages for all card holders.
It is so quick and convenient to use a card when shopping compared to fiddling about with cash. You can just quickly get out your store card and have it scanned and then move on without having to have money with you and fiddle about finding the right amount and waiting for your change.
One problem with these cards is that if you do not repay them in full they will be expensive. The cost is very similar to that of a credit card but usually a bit more expensive. You will not get charged if you repay the full balance but if you do not pay off all of it then you will get charged interest until the full balance is repaid. It could take you a while to do this and all of the time you will be being charged interest on what you owe.
You will be limited on where you can use the card. Unlike a credit card, which is very similar but can be used in most shops, the store card will limit you to only spending it in the specific store it is from and any other branches across the country. You may also be able to shop in stores owned by the parent company. However, you will still be much more limited than you would be with a credit card. This means that if you want items form a different store then you will either need to use your credit card or get a store card form them as well. If you have lots of cards you could find shopping confusing and it will be harder to keep track of your spending and make sure that you budget properly.
It can often be tempted to spend more than necessary with a store card. Firstly it is possible that you will spend extra money just because you have the card. Any special offers could also tempt you to buy things that you may normally not have bought. Offers do this to people as they feel they are getting a bargain even if they are buying thangs that they do not want. If something is cheap it is only a bargain if you were prepared to buy it before it was reduced.
You will also be restricted to just spending in a few shops, This means that you may tend to go there and buy things because of having the card without properly looking elsewhere. It could be that there are cheaper places to buy those items and you are paying more than necessary just because the cad is restricting where you can shop.
So if you have a store card you will have access to extra credit. However you can only use it within that store. You will also be charged a lot if you do not pay off your bill on time. Having extra credit has advantages and disadvantages. It can mean that you can buy more things because you can borrow more money to be able to do so. However, you will also be spending a lot more money and increasing the chances that you will not be able to repay your bill. If you are happy to leave the debt unpaid for a while, this could mean that you will end up accumulating so much debt that it is a totally daunting amount to be able to pay off. The charges could go up and up and if interest rates go up as well you could find that you have a lot of debt that you are having difficulty coping with. So although having access to extra credit seems like a good thing, it can all depend on the circumstance. If you just want it to fall back on and intend to repay the card on time each month then it will not matter so much but if you only pay off a small amount and let the debt mount up then the charges will go up as well.
So it is really important to consider the cost of a store card before you get one. Think about how much extra you will have to pay if you do use the credit and not pay off your bill in full.