Offered by many high street retailers nowadays, store cards can provide great benefits for shoppers who want to take advantage of special discounts in their favourite stores. High street customers must nevertheless be careful as these products are financially risky and may cost more than what the discounts gained are worth.
What is a Store Card?
A store card is basically a credit card which a cardholder can use in store: he or she can buy things on credit and will then receive a statement at the end of each month detailing their bill. Differing from more typical credit cards, however, store credit cards generally come with much higher interest rates and charges, especially for cash advances if they are permitted. They can only be used in specific stores or shopping groups, but should not be confused with loyalty cards which simply allow a shopper to gather points to spend.
Instant Decision Store Cards
High street customers can apply for store cards online or directly at the till when paying for items. Like with any credit card, the borrower must be at least 18, have a permanent home address, and is usually required to have a good credit history. As companies are increasingly eager to entice new customers, instant decision store cards are becoming easier to find as the application process generally examines only an applicant’s basic details. An instant decision store card is usually applied for online without the hassle of paperwork, though this does make it dangerously easy for almost anyone to take out what is still a credit card.
Store Cards for Bad Credit
With some store cards, no credit check is made – again making these products easily accessible. Through all retailers should, and often do, check a customer’s credit rating, some have less stringent acceptance criteria than others, meaning borrowers on very low disposable incomes can sometimes get credit. This can lead to cardholder getting into debt they cannot afford, so care should be taken before signing up.
Store cards for bad credit ratings are therefore easy to come by; for many people they can be the only credit card available. Each person taking out a store card should have a good idea of the relevant credit card charges and interest rates, as well as their own disposable income, as it is essential to have a good understanding of how to manage them. As with other credit cards for bad credit, it is easy for debt taken out on such store cards to get out of control.
Advantages of Store Cards
When applying for store cards online or in shops, customers are usually offered deals which make these products so appealing in the outset. An initial discount is often given to the cardholder such as 10% off purchases for 3 months, and then further promotions such as cardholder-only reductions, membership events, free gifts, and free online delivery may be offered. Those who apply for a store credit card and are good with managing their finances may therefore greatly benefit from taking one out, particularly if they shop at a particular store often enough to save themselves money.
Disadvantages of Store Cards
Store cards charge a much higher interest rate than more typical credit cards do, which often overrides the perks associated with store cards. Around two thirds of major store cards charge over 25% interest, while some charge nearly 30% which can be twice as high as many standard credit cards.
As store cards are such risky products to take out, specialist websites should be used to review and compare store cards to assess whether the benefits of shopping at discounted prices can outweigh the potentially extortionate costs.