What’s So Bad About Store Cards?
In essence, store cards work much like a credit card, allowing you to put off paying for your purchases until a later date. Unlike credit cards, though, store cards can only be used in a particular shop. To lure you in, the card will typically come with special offers and discounts that make you feel like you’re a member of the shop’s inner circle. Nothing in this world really comes for free, though- and those special offers mask a darker side to store cards.
That’s because they typically come with enormous interest rates of between 25-30%, which goes beyond even the most expensive standard credit cards. Yet few customers understand what they are actually getting into when they sign up for a store card. The people selling them to you aren’t financial professionals. Instead, they are just whoever happens to be behind the till at the time- definitely not the sort of person you should be trusting with such an important decision. They know nothing about you or your financial situation, and are only offering you the card because they have been trained to do so.
Using Store Cards to Your Advantage
While store cards are dangerous in the long term, there is a way that you can play the shops at their own game and actually save money with these cards. If you’re planning a major purchase, such as a new oven or washing machine, then you might want to take out a store card with your chosen seller first. That’s because they will often offer a big discount on your first purchase with the card as a way of luring you in. All you have to do is buy something with the store card, then pay off the balance in full. Just be sure not to use the card again, as any future discounts will be massively outweighed by the interest you pay on your balance. Don’t even allow yourself the temptation- cut that card up with scissors so you won’t make the mistake of using it again!
Store Cards Aren’t Worth the Risk
Store cards are marketed to seem like a money-saving solution, but if you don’t pay off your balance right away, they can quickly lead to some pretty serious debts. Miss even one payment, and the discount from the card will dissolve before your eyes, and become just another debt that you can’t afford. Unless you are willing to take on that risk, then it’s best to just stay away from store cards altogether