Store cards can seem really great. Normally when you take one out, you will get some sort of discount and you will be able to take advantages of other offers as well. There may be special store card holder’s evenings or early access to sale items. However, it is worth considering some things before you sign up to a store card
- High Interest
Store cards tend to have higher interest than other types of credit such as credit cards or overdrafts. In fact many people sign up for a store card without even looking at how much the interest rate will be. This is fine if you will be able to pay off the full balance each month, but if you do not, then you will need to think about whether it is the cheapest option for you.
- Minimum Payment Must Be Found
Each month you will need to find enough money to pay the minimum balance. If you are already pushed financially, then this could be difficult. If these payments are not met then there can be very high charges and fees. It is also wise to pay off more than the minimum balance as the debt will cost less, but this may be too expensive for you.
- Not Fully Explained
Cards are often issued by sales staff who knows very little about them. They may not understand the terms and conditions and will not explain every aspect about the card to you. This means that you may not be given enough information to be able to make a sensible decision as to whether to take out a card or not.
- Easy To Apply For
Store cards are very easy to apply for. Although a credit check is usually done, they can just take a few minutes in store. This means that you will not have time to consider your decision and whether it was a sensible one. Luckily there is a cooling off period where you can cancel a store card, which lasts for a week, so this can be an option if you do change your mind about having one.
- Target The Vulnerable
These cards tend to appeal to students or young people who are more vulnerable financially. They could lead to them getting in to debt or more debt and finding it very difficult to cope. The card can seem like a way to be able to get some new things and it is easy to forget about the fact that they have to pay for in the end.
It is therefore sensible to give a store card a lot of thought. They can be expensive and very easy to sign up to. You may be tempted to shop in that store more often and buy things that you may not really be able to afford. There are other forms of credit that might be a more sensible choice or it could be better to avoid borrowing any money at all.
Loren is a freelance blogger who occasionally writes on finance and relationship, She recently read an article at Ratesupermarket about mortgage rate and found it very useful.