Are Store Cards Worth the Cost?

Store cards have become very popular in recent years. While these are essentially the same as credit cards, you can only use them at one store the store whose name appears on the credit card and which issued you the card. Depending on the store name, you can use the card at any of the stores in that chain, which means that if you are in another town or city, or even another country where the store has a physical presence, you can use it to make purchases in that location. One of the main disadvantages of using a store credit card is that you can only use it to make purchases. No cash transactions or withdrawals are permitted and you cannot use this type of card in an ATM or at a bank.

Another disadvantage of having a store card is that you often buy on impulse when in the store. Just because you do have available credit often causes you to buy something you do not really need. However, if you are shopping in the store and see an item that you do really need that just happens to be on sale, you can buy it using the card and then pay off the cost when you have the funds available to you. Quite often the same article may be much cheaper at another store, but when you want to use the store card for your purchases, then you are restricted in where you can shop and buy.

Some stores offer incentives to consumers in an effort to entice them to sign up for a card. This includes such things as reward points that they can cash in when they accumulate enough points and basically receive an item of their choosing for free. Sometimes, the stores allow consumers to buy anything in the store, while other store cards only have certain items that consumers can use to redeem their points.

If you do carry a balance on your store card each month, then you should be aware that you are paying a very high rate of interest on the unpaid balance. It is very easy to get deeply in debt with a store card because of the opportunity you have to make purchases you otherwise may not have made. When you do reach your credit limit on the card and cannot make any more purchases until you pay off some of the balance, many stores will increase the credit limit enticing you to buy more.

If you have a fairly good credit rating, you are far better off applying for a credit card rather than a store card. A credit card gives you the opportunity to shop where you please so that you can shop around for the best price. A 0% credit card will enable you to pay off the outstanding balance that you have on your store card so that you can pay it odd a lot sooner at no cost to you.

If you do have a store card and carry a balance each month, look at your statement when you next receive it. Check the amount of your last payment and then subtract the interest that was deducted from this payment to see how little you actually paid on the balance. This is really an eye-opener for some consumers who did not realize that it would take them a long time to pay off a large amount of money.