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In the past you could only get credit cards from a select number of banks and financial institutions. However, these days you can get credit cards from virtually anywhere, with one of the biggest rises being in retail store credit cards. These cards can seem attractive, especially if they come from a shop in which you make regular purchases. However, there are some downsides to these cards as well. If you are new to the world of store cards, then here is some advice to help you get in the know. What are store cards? Basically, store cards are like credit cards, in that you are given a credit limit that you can spend on the card. However, store cards can usually only be used in the particular store or group of stores that you get the card from. In essence, you are getting credit to shop at a particular store or number of affiliated stores by using their special credit card. What are the benefits? In order to entice people to get a card that is limited to one store, the retailer will offer you a number of discounts or special offers. These might include a free gift, or reductions on purchase prices when you use the card. If you regularly shop at the store then you could really make a saving on items that you need using one of these cards. Another advantage of store cards is that you can usually get one even if you have bad credit, meaning that you can use the store card to help you build up your credit history. Are there any drawbacks? Although store cards do have some advantages, they are a very expensive form of credit. Most store cards have interest rates of 25-30% APR, which is well above the normal price for credit cards. This means that unless you pay the balance off in full each month, you could be left with debts that are costing you vast sums in interest. Also, most store cards are very limited because you can only spend in the chain of stores. Unless you use the store a lot, then a store card is probably not worthwhile. Can it be used as a credit card? Although many store cards are still limited for use in one set of stores, some store cards are being changed to full credit cards. These cards can then be used in other shops and retailers like any other credit card. However, the interest rate usually remains the same, meaning you will be paying a lot more than usual for your credit privileges. Are they worth it? Although store cards are very expensive and are not worth the money for a lot of people, you can benefit from a store card if you use it in the right way. If you are finding it hard to get a regular card, then using a store card can help you build up your credit history. Also, if you have a favourite shop that you make a lot of purchases in, then having a store card and paying off the balance in full each month will allow you to get the benefits of a store card without paying the high interest rates.
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