Many stores now have store cards and it can tempting to take them up as well as having a credit card. However, it can then be confusing to know which to use when you are shopping in the store.
What is a Store Card?
a store card is issued by a specific store to use when shopping at that store. It works very much like a credit card in that you can use it to buy things and then pay it off when you get the bill at the end of the month. You will be able to choose between paying just a minimum amount and also be charged interest or pay off the full balance and pay no extra. Many larger chain stores will offer these cards to customers with a good credit record.
Differences between store card and credit card
With a store card you will only be able to use it in the particular shop that has issued the card and possibly any other stores owned by the same company. This means that you will be limited to where you can use it, compared with a credit card which you can use in most stores.
A store card may offer you incentives related to that store. For example they may offer you money off, allow access to preview sale evenings, give you discounts or things like this. What they offer will very much depend on the store, but they will let you know what the benefits are as they will want you to take out the card. A credit card may offer benefits as well, such as cashback, but these are not going to be determined by which store you use it in.
The interest on a credit card or even a no credit check loan tends to be a bit cheaper than the interest on a store card. So if you intend to take out a card and not pay back the full balance each month, then it is important to make sure that you go for the cheapest option. Interest payments can really add up and make what you bought on the card very expensive, so it is worth making sure that you are aware of the cost and that you compare different cards so that you can go with the cheapest.
Which is the best?
Choosing which card is the best for you is a personal decision. If you intend to pay back the full balance each month, then it is best to choose the card which offers you the biggest benefits. However, if you are not paying it back in full, then it is usually cheaper to use the card with the extra interest charged will be lowest interest rates. The other card may offer benefits but it is likely that the extra interest charged will be more, than you gain in benefits. You can do the calculations though, to check that is right.
You spending potential is something that is also worth thinking about. Consider that the credit card and store card you choose will open up an opportunity for spending which you may not have had before. You will be able to spend up to the credit limit of those cards and if you do not have the money to repay it or decide that you do not want to, it can mean that you are opening yourself up to a lot of debt. The card which has the biggest credit limit is the one which potentially could be the most dangerous as you could borrow more and end up paying a lot more for this borrowing.
The flexibility of a credit card can often make it more appealing. You will not need a different card for each shop that you go to, but just one that will be accepted at them all. This can make things easier and less confusing for you but also mean that you do not have to carry so many plastic cards.
Obviously if you have a card for your favourite store and they have some special offers for card holders, then you could really benefit from them. However, you do not have to use your card regularly to benefit, just when they have the special deals. If you set up a direct debit to pay off the full balance owed on the card at the end of each month, then it will cost you nothing extra.