Many High Street shops offer their own store credit cards, and many cashiers will tempt you to sign up with a juicy introductory rate or money off your purchase. But are store credit cards worth it, or would you be best off making the purchase on your normal credit card?
Store credit cards work in the same way as a credit card, as you use the credit (although it is important to remember that credit is always debt) to make the purchase and then you pay the debt back when the bill arrives, either in monthly instalments or by paying off the store credit card balance in full.
A store credit card is more limiting than a normal credit card as you will only be able to use the card in certain shops or a certain chain of shops. But the main disadvantage of a store credit card is the interest rate which is applied to the purchase if you choose to spread your repayments, as these are often much higher than normal credit card rates. This means that you could be very careful when applying for a store credit card, think about if you can afford to pay off the purchase when the bill arrives or if you would be better off to put it on your credit card or, and best yet, choose to wait until you can afford the item and pay for it with cash.
Store credit cards can offer you advantages over a credit card, if they are used wisely. For example, you will be able to benefit from discount off the item you are going to buy. Many retailers will also often certain perks which are exclusive to card holders, such as money-off events or free postage and packaging if you buy something from their website. But you need to way up the perks and implications of a store credit card and decide if it is right for you.
Never agree to a store credit card just because you are feeling pressured by the cashier, especially if you have a bad credit rating. You could be declined for the card which is not only embarrassing for you but could end up damaging your credit rating even further.
In comparison to paying with a credit card or with cash, store credit cards offer very little perks. They are only a good idea if you can realistically afford to repay your balance in full so that you do not have to pay the extortionate level of interest.