In the olden days, credit cards were offered only by certain banks and financial institutions. But today there are infinite numbers of providers offering credit cards. One of the major players are retail store credit cards. These cards may look attractive, especially if they are offered by a shop where you shop frequently. But there are drawbacks to these cards too. If you are new to store cards, then this article will provide some informative advice.
What are store cards?
Store cards are similar to credit cards, as you are offered a credit limit to let you spend on the card. But unlike credit cards, store cards are valid only in the specific store or group of stores that have offered you the card. Basically, you are given credit to buy at a specific store or various related stores by using their special credit card.
What are the advantages?
To attract people to get a card restricted to a single store, the retailer offers lot of discounts or special offers. These can consist of a free gift, or discounts on purchase prices when you use the card. If you buy from the shop frequently, this card can lead to big savings on your necessary goods when you use these cards. Another advantage of store cards is that getting it is quite easy even though your credit history is bad. This allows you to restore your credit history.
What are the disadvantages?
Though store cards are advantageous, they can be very expensive type of credit. Most store cards carry interest rates of 25-30% APR that is higher than the rates of credit cards. This means unless you repay the entire balance every month, you could be saddled with debts that will force you to pay exorbitant amounts of interest. Besides most store cards are highly restricted, since they are valid only in that specific stores. So this is not worth it, unless you shop a lot at the store.
Is it possible to use as a credit card?
Though most store cards have restricted use, few store cards are converted to regular credit cards. Then these cards can be used in other places just as a regular credit card. But the interest rate generally is the same, implying you have to pay far higher amount than normal to enjoy your credit rights.
Are they worth it?
Though store cards are very expensive and not worth it for many, it is possible to benefit from a store card provided you use it carefully. If getting a regular card is difficult for you, a store card is a good way of restoring your credit history. Also, if you shop a lot in the store offering the card, then using a store card and clearing the entire balance every month, will let you benefit from a store card without paying the exorbitant interest rates.