This section looks at store cards.
How they work
A store card works like a credit card and they are issued by a wide range of high street chains or groups. Very often you are enticed with the promise of a discount if you choose to sign-up, although firms delay the discounts now to allow for a cooling off period of 14 days to change your mind about having the card.
Some people choose them because they offer a way of delaying payment by putting purchases on credit and paying them off at the end of the month. As with credit cards, if you do not pay the full amount at the end of the month, you will be charged interest. It is worth noting the interest rate for store cards is usually higher than a credit card.
You must be at least 18 to get a store card and you will be subject to a credit check.
What to look out for
- Check the Annual Percentage Rate (APR) before you sign up, and compare this to what you get, or could get on a credit card from a bank or building society. The APR takes into account not just the interest on the loan but also other charges you have to pay, for example, any arrangement fee, so it is a good way of comparing one banking product with another.
- To avoid paying interest, you should always try and pay off your bill in full each month. Your statement will show you the minimum amount you have to pay, but this will mean it takes longer to pay the money back that you have borrowed on the store card, and this builds up interest. In effect, the ‘discount’ you might have received on the purchase by using your store card is outstripped by the eventual amount you pay back.
- Consider setting up a Direct Debit to make sure you never forget a payment.
The Financial Ombudsman Association is able to assist with complaints about credit, debit and store cards.