There are many stores that will now offer cards to customers so that they can buy things right away and delay paying for them. These have advantages and disadvantages but it is worth giving them some serious thought before signing up. You want to make sure that the card will work for you. If you already have one or more then think about whether you are using them to your advantage or whether you are overpaying for them.
How the cards work
A store card works in a similar way to a credit card. You will use it to buy items in the store and then after a number of weeks you will receive a statement which will show how much you have spent. You will then get the option to repay the minimum amount owing which will be the interest on the card and perhaps a little more or the whole balance. It is also possible to pay off any amount in between as well, although not everyone realises this.
The card can usually be used in that particular store and any branches of that store in other cities or states. It may also be able to be used in other stores that are linked with that particular one. Unlike a credit card they are limited in that you can only use them in certain stores rather than being able to spend them anywhere.
How they can cost you money
If you repay the store card in full then you will have to pay no interest or fees. However, if you decide not to repay the full balance then you will have to pay interest on what you owe. If you do not even repay the minimum balance there will be additional charges that you will have to pay. These costs are made pretty clear and so you will be aware of how much you will have to pay. However, there may be other costs that you are less aware of.
It could be that you choose to shop at a particular store because you have a store card. This may be because you want to take advantage of not having to pay for the goods right away but it could mean that you avoid shopping in other places that might sell the goods for cheaper. This means that you are paying more than necessary for the items. You may also be tempted to spend more if there are any special offers in the store for card holders. It may feel that you are saving money if you are buying things on special offer. However, we often buy things that we normally would not buy, just because they are on offer. It can feel like you are saving money because you are getting things cheaply, but you are actually paying out money and therefore spending more than you would have done otherwise.
How to use them to your advantage
There are advantages to having these cards though but you have to be careful when using them. You can delay when you will pay for items and so as long as you are careful to make sure that you will have enough money available to pay them in full when the statement arrives, you could end up better off if you can get some interest on the money you have put by while you are waiting for the statement to come.
If you enjoy shopping in the store and their prices are good, then you might be able to take advantage of some of the special offers that they might have available. It might be that you will be able to save a significant amount of money buying items that you would have bought anyway but that you can now get at a significantly lower price. You do need to be sure that you really are using them to your advantage though and not being tempted to buy things that you do not really need.
Some people will see a store card as a way of having more things and they will not think too much about repaying it. They will just spend on it and enjoy the items they can buy and not repay the card. This can get very expensive and because of the interest charges you could end up paying significantly more for the items than you would if you did not use the card. It is therefore really important to only take out a card if you can trust yourself to not spend on it without thinking and without repaying the full balance when needed. You should know yourself well enough to know whether it will be a good idea for you to get the card or not. It is a decision that is well worth thinking hard about.
