Store cards or credit cards

There are many different forms of credit available to consumers in the UK today, and much of this comes in the form of plastic, where consumers can enjoy getting credit to make purchases with the convenience and ease of plastic.

This includes credit cards and store cards, both of which enable consumers to make purchases on finance, and then repay the balance at a later date. There are a number of similarities between credit cards and stores cards, as well as a number of stark differences, all of which should be considered when deciding whether you are better off with a credit card or a store card.

Credit cards

Credit cards have become enormously popular in the UK over the years, and despite their reputation for contributing to the nation’s worrying high consumers debt levels, they do provide real convenience, ease, and flexibility when used property and sensibly. With credit cards you can use the plastic to make purchases both at home and abroad wherever the card is accepted. You can also use your credit card to make phone and Internet purchases, which adds to the convenience.

You can get a number of different types of credit card these days, from 0% balance transfer cards to 0% purchase cards, rewards based credit cards, and charity donation credit cards. Where interest is charged on a credit card it is only charged on balances that are spread over longer periods, and not in cases where the balance is repaid in full each month. Interest and charges are also applied to cash transactions on credit cards, which includes withdrawing cash from cash point machines.

• Credit Card Benefits
  A credit card can be a highly effective and flexible financial tool for the smart shopper – and saver. It has many obvious advantages over cash and cheques – and a few hidden ones too!

With a credit card you can use your credit anywhere providing the retailer accepts credit card payments, which means that you enjoy choice as well as convenience. You can also use your card to take out cash in the event that you need to. For those that do spread their repayments and do not have a 0% purchase credit card the interest payments can be high.

Store cards

Another form of plastic credit comes in the form of a store card, and these cards are available from a range of retailers. Like credit cards store cards can be used to make cashless payments for purchases and the balance can either be paid in full at the end of the months, in which case no interest is charged, or it can be repaid over time, in which case you may be hit with costly interest charges. You cannot make cash transactions or withdrawals with a store card, as these cards can only be used to make purchases.

Store cards can be quite restrictive compare with credit cards, as you can only use them at a selected retailer or chain or retailers depending on which store card you have. This means that you have far less choice in terms of where you use your card. Many people take out these store cards because of the generous initial and ongoing discounts offered to customers but you will find that if you spread your repayments your interest charges will by far outweigh any discounts that you receive. Store cards can be useful and affordable for those that do repay their balance in full each month, as you can then enjoy the discounts and deals without being hit by extortionate interest charges.

Tom Smith
12th November 2007

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