Are Store Cards Worth Having?

We've all had the experience of queuing up in a department store, cash in hand and ready to buy, only to get to the counter and be tempted by the offer of a 10% discount on your purchase if you take out a store credit card and use it instead of cash to pay.

This may seem like a great idea on the face of it - after all, who wouldn't like a discount on something they were willing to buy at full price? There is, of course, a little more to it than that.

Whatever the marketing blurbs may say, trumpeting discounts or loyalty schemes, store cards are in reality just a type of credit card whose use is limited to one store or group of stores. The real feature that differentiates them is the cost.

High APR

The typical store card will 'boast' an APR much higher than that seen in the usual standard credit cards, with most rates touching the stratospheric figure of 30% (compare this to the sub-10% rates seen in the best general purpose cards).

It could be argued that this doesn't matter for smart cardholders who use the card to enjoy the discounts and other benefits, and then pay their bill in full when the next statement arrives. This strategy works for credit cards which have interest free periods in which to settle your bill without charge, but you may find that your shiny new store card offers no such grace period and you'll be being charged interest from the day of your purchase.

With that caveat, a store card can make sense if you're a regular customer at a certain store and would benefit from regular discounts while always clearing your bill so as to avoid interest. Otherwise, you will probably be better off using a general purpose credit card with a good rewards scheme, cashback program, or introductory 0% purchases deal.