Who Benefits From Store Cards: You or the Store?
When you are offered store cards it seems the store staff can’t do enough to help you. They seem to understand your situation, they’ll tell you they have store cards and how great they are. They’ll offer you a discount to join, give you a spending limit that allows you to buy a whole load of products there and then and even inform you of future offers you’ll receive just by having a card. It seems this magic card is the answer to your problems and weren’t the store staff so nice in pointing you in the right direction?
Of course, once you have left the shop and your mind is focused on reality again as opposed to shoes and jeans and handbags you realise you haven’t actually had such a great deal after all. You have effectively just taken out a credit card that you now must manage to pay back each month and for all the time you are not able to pay back the full balance you are charged interest that goes straight to the store with all the lovely staff who encouraged you to take out the card in the first place.
Do I Benefit At All?There are of course some benefits to having a store card. You are able to buy products on credit and not have to worry about the money until the end of the month when the bill arrives. If you get paid on the same day each month and it’s simple a case of buying the products on your card just until your wages come in – perhaps you need an outfit for an event that takes place before you get paid – then fair enough. As long as you pay the balance off as soon as you get paid then you’ll be fine. You don’t get charged any interest and you get to shop when you like, regardless of when your pay day is.
How Does The Store Benefit?Even if you do pay back your balance each month though – thereby not giving the store a chance to charge you interest – the store still benefits because it has secured your custom. The card can only be used in specific shops so the store knows you will be returning to use your card.
The big benefit for the stores though is the interest. Interest on store cards in usually higher than on credit cards, so for every purchase you make the store makes a nice tidy profit. If you think about it logically – when you shop with cash you would never pay over the price on the tag would you? Yet with store cards you can sometime pay up to 20% on top of the price – and sometimes more.
Store cards can be useful but don’t be blinded by the chance to get ‘free’ clothes and forget what’s really going on. The store is a business and is out to make money and secure custom. If you are willing to pay back the balance each month and it is a store you really like then get a store card. If not seriously consider whether you are willing to line the pockets of the store bosses with your hard earned cash.