Many stores offer a card where you will be able to spend on it in store and not repay until you get a statement. This works in very much the same way as a credit card. It can be tempting to get one for a selection of reasons but it is worth looking at the advantages and disadvantages before you decide what to do.
Advantages of a store card
- Can delay paying for items – with a store card you will be able to go into the shop and buy things and not pay for them right away. This will give you interest free credit for the period of time that you have the items but have not paid for them. If the money is in a savings account earning interest, then you will financially benefit from this. Although savings interest is low at the moment, it will still make some difference and you will be better off than if you spent the money right away. It might also help you if you have a few weeks to go until you get paid but you need items right away. You can buy them and then when you need to pay for them you will have the money available to do so.
- Sometimes get special offers – stores will often have special benefits for card holders. This might be money off shopping at certain times of the year, competitions and discounts but it is also common to get early access to sales and new ranges. These benefits will be different for different store cards and so if you are getting a card because of the perceived benefits, make sure that you are aware of what they are before you get a card or else you might be disappointed. You may also find that some benefits, such as a discount, might only be available to new card holders for a limited time, so make sure that you find out details about this as well, just in case you get caught out.
- Convenient to pay – it can be much quicker to pay in a store on a store card than by other means. Many people do not carry cash anyway and just swiping a card means that you can be through the check out very quickly. You may even be able to use a self-service till if you have a card and not even have to go to a conventional check out which could speed the process up even more.
Disadvantages of a store card
- Get charged interest if not repaid immediately – when you receive your store card statement you will have the option of repaying the balance in full and paying nothing extra. This is the best option to take. However, many people delay paying and just pay the minimum that is required. This is often just the interest or the interest and a little more. If the payment is delayed again and again interest will keep having to be paid on what is owed until the balance is cleared. It can be hard to calculate the total cost of this as the interest is paid off each time but it can add up to be a lot of money, especially if you delay for a very long period and keep using the card and adding to how much is owed.
- Can only use in one or limited shops – a store card can usually only be used in the shop that it is issued in, although you may also be able to use it in other shops that have the same owner. This means that if you like the idea of store cards, you will need to have one for each of your favourite shops. This can add up to a lot of cards.
- Harder to track spending if you have lots – if you have a lot of cards it can be more difficult to keep a track of your spending. This is because you will need to not only track how much is being spent on one, but on multiple cards. You can normally check the amount owed online, but if you need to do it for lots of cards, you might be reluctant to keep doing this as it takes so long or you may not be able to remember the passwords to check them all. In this situation it can easily get out of control and you could find out that you owe a lot more money than you realised when you receive your statement.
How to decide
It can be wise to weigh up things carefully before getting a store card. Think about whether you feel you will be able to monitor your spending and easily keep a check on what is going on as well as afford to repay in full when necessary. It is a tricky decision and only you will know whether you will be suited to a card like this.