Having cards to use in shops is common place. However, you may wonder which might suit you the best. You will find that you have the option of a store card, a credit card or you can use both. It can be confusing knowing what to do for the best, so it is a good idea to understand more about the cards and how they work.
Similarities with Credit and Store Cards
Both types of cards will allow you to buy now and pay later. What this means is that you will be able to use the cards to purchase things and then you will only need to pay off the balance on the card when you get a bill. This can take up to six weeks, which means that for that time you will get interest free credit. However, then you will have a certain amount of time to pay off what you owe and you will be charged interest if you do not pay it. There will be a minimum amount that you will have to repay each month and then you will have the option of repaying the remaining balance when you want to. Each month you will get a new statement, with a new minimum amount that you will have to pay and the choice of paying the rest or leaving it outstanding. The amount you have to pay will cover the interest on the money you owe and will pay off a small amount of what you owe. It is worth noting that you can repay any amount above the minimum, so you do not have the either ay the minimum or all of the balance, you can pay something in between.
The interest rate on cards can be high compared to other ways of borrowing. This means that a lot of people that have this sort of card will choose to repay everything that they owe each month. They will still get the convenience of being able to pay by card, which is quick and the interest free credit until they get their statement, but they will not have to pay anything for this privilege. You can even set up a direct debit to automatically repay this and it is wise to do this for just after you get paid so you have the money available to repay what you owe.
Differences Between Them
With a store card, you will be limited as to where you can use them. You will normally be able to use the card in every branch of the store that you go in and if they have any other stores owned by the same company. However, you will not be able to use it everywhere. Most credit cards are accepted in many stores and this means that you will be able to use one card to shop at lots of places, rather than being limited to a few stores and perhaps having to have a selection of different cards for the different places that you shop. Having multiple store cards has disadvantages in that it is less convenient to have to carry lots of cards. However, it does give you access to a lot more credit which means that you can borrow and spend more money which you may want to do, but it can then cost you a lot more money if you do decide to borrow money on all of them. So, it can be a an advantage and disadvantage to be able to borrow more.
You may find that you get cash back or rewards with some cards. Stores may try to persuade you to use their cards by offering you some rewards. You might get some money off or early access to sale prices or things like this. If you like shopping in that store, then this could be great as you will save money. However, it is always wise to compare prices as sale prices in some stores could be still dearer than prices in other stores. Having a store card may increase your store loyalty but mean that you stop comparing prices or looking to see whether other shops have better value for money. Some credit cards will also offer rewards so it can be good to take a look at those as well.
The interest rates may vary between the cards as well. If you do not intend to pay off the full balance, then it is good to compare them and see which will be the cheapest for you to have. The rates may change as well. So, keep a close eye on the terms and conditions so that you are aware of what they are and how they compare to other cards that you could use as an alternative.
It is therefore good to think about whether you want one card that you can use everywhere or whether you want specific store cards so you have more, but you get more credit available and you may then get rewards related to the stores you have the cards from. Whichever option you choose, you will find that it is an expensive way to borrow so it is always worth trying to repay the balance in full each month and avoiding paying the interest. It is also worth thinking about whether you are likely to get yourself into unmanageable debt if you get cards like this. They can make spending very easy and it is not always easy to keep a track of what you are spending on them. You could find that you end up spending more than you can afford and you do not realise until your statement arrives. You should be able to track spending online, so it is important to do this and to think about whether the temptation to overspend will make it not worth you getting the card. You know what you are like, be honest with yourself and consider how you think you will behave.
