Many stores will have a card on offer to their customers. When you apply they will do a credit check and you will often have access to all sorts of special offers, store events and other bonuses which could mean that you will be more likely to shop at that store. They can seem to be a great way to save some money, but are they as good as they seem?
Often a store will try to do everything they can to get you to shop there. Without customers they will not survive. This means that they will have all sorts of offers and tempting events to get you shopping. If you have a store card they try this even more, not just because they now have your contact details so have a way of contacting you but because they can potentially make more money form their store card holders than other customers.
Not only will store card holders be more tempted to shop in store because they can use their card and therefore do not have to pay for their purchases right away, they also may end up paying more. This is despite the fact that they are given all sorts of discounts and bonuses. This is to do with the interest on the card.
A store card works rather like a credit card in that you will not have to pay any money until you get sent a bill at the end of the month and then you can pay it all off or you can just pay off a minimum amount and you will be charged interest on the remaining balance. This interest rate can be extremely high and it could mean that you will be paying a lot more for your purchases than you think you are. The longer that you take to pay off the card, the more that you will pay in interest and it means that you could end up paying much more for the item than you would have ever considered paying or it had it been priced that in the first instance.
The best way to use a store card is to set up a direct debit so that you pay off the full balance each month when it is due. This means that you will get to enjoy all the benefits of being a store card holder without having to pay anything for that privilege. You do need to be careful still though. You may find that the items that you are buying from that particular store are cheaper elsewhere. So do check prices and compare to make sure that you are not overpaying. Just because there is a discount or sale does not mean that you are automatically getting the best deal. It is easy to check priced online these days so you can see whether you can get that item for less elsewhere.
If you think that you are the type of person that will overspend with a store card or be tempted not to pay it off in full, then it is a good idea not to get one. If you are not sure, then just imagine what you may be like and you could always trial one for a month and see whether you think it makes a significant impact on your spending. You will need to have good self-discipline to cut up the card though, if you think that you are overspending with it. However, if you think that you will just spend as normal in the shop and use the card to take advantages of discounts but pay it off in full each month, then it will be of benefit to you.
As with all forms of credit or loans, it is wise to think hard before signing up to a card like this. Consider whether it will advantage you or disadvantage you. It will all depend on how you choose to use it and you need to think about you and how you think you will behave with it. You know yourself the best and you should know whether you can be trusted to do the right thing with a card like this or whether you should just avoid using one.