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Store card incentives banned

store card incentives banned
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We’re often tempted to take out store cards when making a purchase, but we can no longer be offered instant store card incentives to do so. A voluntary agreement between the Government, banks and the British Retail Consortium has seen store card incentives banned and means that stores now have to wait at least seven days before offering discounts to card holders.

What can retailers offer?

From March 2012, retailers have been prevented from offering us an instant introductory discount if we sign-up to their store card. Before this, it was often the case that employees would make commission on each customer that they gained. They would also try and tempt customers with an instant discount on their purchases that day. This was a lucrative way for the retailers to get new customers, as they would see the savings rather than considering the financial impact. This led to some customers running up large debts that they were unable to pay back.store card incentives banned

Store card incentives banned

In an attempt to reduce the numbers of people struggling with large and expensive debts, retailers cannot provide store card customers with any discounts or benefits for the first seven days. The agreement also stops stores incentivising their employees by offering commission on new customers.

Stores are still able to offer discounts to their store card customers, as long as they become eligible for them after the initial seven day period. The discounts on offer can sometimes make having the card worthwhile. They can include a one off discount on the next shop over a certain price point or seasonal discounts; a short or long term free delivery offer; and early access to the sales or an extra discount.

Are there any benefits to having a store card?

One of the major concerns people have with store cards is the high level of interest they charge. If the account isn’t managed correctly, a small balance can soon build up and get to the point where it’s impossible to pay it off.

However, for those with financial knowledge and willpower, they can still be a beneficial way of paying for goods. You need to be wise over what you use the cards for, the amount you put on them and when you pay off the balance. Customers who clear their balance at the end of every month won’t have to pay interest.

Plan ahead

A store card can help you get a good discount if you’re about to make a large purchase at a specific store. By applying for the card in advance, you would be able to take advantage of the discounts offered to new customers; for example, £50 off a £200 order. For customers planning on attending a large group event, such as a wedding or prom, a store card could help you and your friends save money. Only one of you needs to apply for the card, but if you all purchase your items at the same time you’ll be able to take advantage of the introductory offers. By then paying off the balance when your statement arrives, you would have saved money without being charged any interest.

Without the instant offers, store card customers can now make a more considered decision before applying. There are still advantages to them, but it’s important to only use the cards if you can afford to repay the money at the end of the month. Any balance that remains on your card will incur a substantial rate of interest and could wipe out any discount you gained.

 

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About Catherine Stern

About Catherine Stern

Catherine Stern is a freelance writer with a background in marketing and PR. She currently writes web content on a range of subjects, from finance and business to travel and home improvements. As a working single mum of two young boys she understands the pressures that today’s working parents face and the topics they want to read about.

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