Store cards are very similar to credit cards however store cards can normally only be used at a specific store or at a specific store group. They should not be confused with loyalty cards – loyalty cards reward you with points when you buy, but they do not offer you credit facilities. Store cards offer credit facilities as well as loyalty points. Store cards should not be confused with store-linked credit cards such as the Marks & Spencer &More Credit Care, Tesco, Sainsbury’s and John Lewis to name a few – these are plain and simple credit cards which are branded with the store’s name.

Store cards can be very dangerous. Their APRs are often incredibly high – many charge over 25% interest which is far more than most credit cards. They are often targeted at young people – to many young people, this is the first piece of credit they will obtain and few will have any understanding of how to manage them or how the interest on them works. Young people are incentvised by the introductory offers such as get a 10% discount on your first day’s purchases. This may seem like a bargain but the interest rates make up for the initial discounts.

There is one simple rule for store cards – DO NOT USE THEM FOR CREDIT!
Always pay off the full balance on them at the end of each month to avoid huge interest charges. If you need to use credit to pay for your goods, use a credit card with a much lower APR.

There are times when store cards are a great idea – however it will only stay a great idea if you don’t use them as a credit facility!
Special Evenings – Most stores will hold events or previews for store card owners. This is a great chance to see previews of their latest collections, or just have an enjoyable evening out.

Initial Discounts – The best time to get a store card is when they are offering a percentage off your first day’s purchases. Get together with a group of friends and go shopping! That way, you all get the discount rate. As long as you pay off the balance, no interest is charged and you get a great discount! Your friends can always  sign up in a few months time and you can all go for another shop together. Bear in mind that signing up to a store card may make it harder to get credit later on, so weigh up the pros and cons before applying. Each time you apply for credit, a search is added to your credit file. Too many searches in a short space of time indicates you may be short of money and other lenders may be unwilling to give you credit. If you are out to capitalise on the discounts, make sure you leave a couple of months between each application, and cancel any old cards. Also make sure that if you need credit for any other reason – for example you need a new mobile phone or you need house insurance – ensure that you take this first before applying for the store card to ensure that your credit file remains healthy and that you are accepted for all the credit you need. 

Click here for a list of our recommended store cards.

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