Are Store Cards Worth Bothering With?

(This is a guest post)

In many stores, when you head to the cashier to pay, you’ll be offered the chance to take out a store card. These bear some similarities to UK credit cards, except you can only use them in the shop or shops owned by that particular retailer.

You can use them to pay for items and then pay your balance off when the bill arrives at the end of the month. But the question is – should you accept next time a sales assistant asks you if you’d like to take one out?

Advantages of store cards

The main advantage of a store card – and the reason so many people take them out – is there is often a sizeable discount on the first purchase you make with them. You can even get a discount on the items you’re purchasing on the day you sign up, so it’s tempting to just say yes and get 1 percent or maybe even 20 percent off immediately. There are also discounts, money-off vouchers and freebies to be had even after your initial purchase, so you could save quite a bit on your shopping when you use them. So, if you have a favorite shop that you visit all the time, it could actually be quite useful to take out a store card.

Drawbacks of store cards

Although there are a couple of persuasive benefits to store cards, there are just as many disadvantages. For starters, store cards tend to have very high interest rates. If you apply for a credit card online with a major provider like MBNA the interest rates won’t be anywhere near as eye-watering, meaning that if you don’t clear your store card balance in full each month, you could end up paying a small fortune in interest. This could completely negate any savings or discounts you get by using the store card, and you could even end up in serious debt. Another point to consider is that a store card can only be used in one particular chain of retailers, so if you don’t visit it very often, your store cards will start to clutter up your wallet.

Store cards are also frequently mis-sold, which means that the shop assistant fails to explain all the terms and conditions, interest rates and charges properly, when getting you  to sign up to the card. Sales assistants, who are not financial experts, tend to work on commission when it comes to store cards, so they are likely to do or say anything to get you to sign up.