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Store Cards: Are they a good deal?

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Store cards are everywhere; we’ve all got to the front of the queue in a shop and no sooner have we put our goods down we are being asked whether we’re interested in opening a store card and saving money. So what are they really all about and can they ever be wise to take out?

How do they work?

Store cards operate very much in the same way as a credit card, you have a limit that you can spend up to but you can’t use them anywhere, only in that specific store. They also charge an extortionate amount in interest and slap on the charges if you miss or make a late payment. They shouldn’t be confused with store loyalty cards which are not a credit facility. Loyalty cards like the Boots Advantage Card or Tesco Clubcard, simply build up points in exchange for money off or rewards. Store cards shouldn’t be confused with certain shops’ credit cards such as the M&S or Asda Credit Cards which can be used anywhere.

Interest rates

Around two thirds of all the store cards charge over 25% interest, some up to 30% which is hugely expensive when compared to a standard credit card let alone a competitive card. Store cards tend to be easier to obtain than credit cards and are commonly missold by shop assistants who usually receive some form of commission or incentive to sign people up and who have no training on the implications of cards with such high interest rates. They are often pushed onto us as we are at the checkout, feeling rushed and conscious of the line of people behind and as a result, we are less inclined to check the interest rates, read the small print or ask questions.

store cards are they a good deal?Store cards are often aimed at younger customers who haven’t yet understood the concept of credit and high interest rates. The introductory offers can temp younger customers into feeling they are actually making a saving whilst not considering the costs and store cards are usually the first form of debt young people get. You would also assume that because you can only use store cards in their own store you would get a better deal as you are limited with its use, but it’s in fact the opposite. They are getting their custom guaranteed while charging us more interest for the privilege!

Can they work to your advantage?

There are ways you can make a store card work in your advantage though, but this mean ensuring you have the means to pay it off in full, on time, every month. Take advantage of the initial offer (usually 10% off). Wait until you need to make a large purchase to make the most of the discount or better still, get together with friends who also are need to make purchases and pool your goods and money together, opening the store card in one name so that the discount is applied to all items and everyone benefits -then pay off in full! It’s also worth trying to negotiate an extra discount at the till. Shops are encouraged to sign people up so are more likely to offer a little extra if it means flogging you the card!

Remember that store cards are a form of credit so every time you apply, your rating will be affected and missing payments will drastically reduce your score. If you have store cards with debt on, consider moving them to a lower interest or 0% interest card to save money and only use a store card if you can pay the full amount each month.

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About Rebecca Robinson

About Rebecca Robinson

After spending the last 8 years juggling life as a mum of two, wife and working full time as a Project Manager for a global telecommunications company, Rebecca Robinson made the decision to follow her love of writing and took the plunge; turning her passion into a full time career. Since becoming a full time writer, Rebecca has worked with various media and copy-writing companies and with the ability to make any topic relevant and interesting to the reader, now contributes to The Working Parent on articles ranging from credit cards to teenage relationships. Ever the optimist, Rebecca's dreams for the future include a house in the country filled with children, dogs and horses in the field!

Website: Rebecca Robinson

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