Store cards are the devil's debt; most charge a hideous 25% plus interest, and even the best aren't better than high street credit cards. Yet it's possible to play with the devil and win by gaining major discounts without giving them a penny. Better still, hopefully the cost to the stores will put them off such ploys.
In This Guide
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What's a store card?
Store cards work and feel very much like credit cards, except that while credit cards can be used anywhere, store cards can only be used in a specific store or store group. They're often confused with loyalty cards (where you accrue points for spending), yet with store cards you can ‘pay and borrow'; with loyalty cards, you just gather points.
It's also important not to confuse store cards with store-linked credit cards; Tesco, Sainsbury, Asda, John Lewis, Marks & Spencer all have these. These are a different breed and can be used anywhere, not just in the named store.
Why the devil's debt?
In a nutshell; because these are dangerously easy to obtain, hideously expensive, manipulative beasts.
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Their exorbitant rates. Around two thirds of the major store cards on the market charge over 25% interest, some are nearly 30%. This is a huge amount, massively more than a standard, never mind competitive, credit card.
They're commonly missold. These cards are often pushed on us by untrained shop staff, who've little idea of the impact and associated dangers of such a high interest rate card. They're simply told to flog them and are usually incentivised for signing people up.
They're targeted at the young. This is the first piece of credit many young people get. Store card providers must love debt illiterate youngsters: they're an easy target and often spend on these cards without understanding how to manage them, racking up expensive, ill-afforded debts.
They hide the fact this is debt. The common sell on the card is a 10% introductory discount, which sells people into debt whilst never explaining the consequences.
They charge us more and get our business. With these cards the stores guarantee that we spend on them in their shops. Yet to do this they charge us more even than a credit card. Logic would dictate it should be cheaper, as it is guaranteeing them custom and more spending in store.
The Golden Rule
"Never, ever, ever, ever, use a store card to borrow on.
If you have one, whatever the reason, always ensure you pay off in full."
Alternatives to store cards...
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If you do need to borrow to spend: use the Best Credit Card for Spending On
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If you already have debts on a store card: simply move them somewhere cheaper using the best Balance Transfer Cards
Time to hit back... dancing with the devil
There are some times we can profit from store cards, yet of course this is providing you never, ever, ever use them for borrowing on. Oops nearly forgot; I don't know if I've mentioned it before, but if not let me just re-iterate to make it plain; never, ever, ever, ever borrow on a store card – that means pay it off in full as soon as you get the statement.
Reasons to use a store card...
Grab the initial discount offers. Many store cards offer a bribe for signing up at various times – such as 10% off the first time you spend on it. Don't simply blow this on buying a T-shirt; wait until there's something in that store that you need to buy anyway that's RRR-EALLY expensive (but still a bargain obviously), then use it.
Better still, do it with friends. To be even more cunning, ask friends & family if they want anything at the discount rate too. Then get the discount, they get it as well (and give you the money for their stuff) and you pay off the balance in full so there's no interest charged. And if you bought your friends' stuff, they can always sign up, get a discount, and return the favour.
Membership benefits. Many store cards have special store card holder evenings and offers, a bit like a membership club. And there's nothing wrong with keeping a store card just for this.
Negotiate. Many sales assistants get excited when you take out a store card as they have targets to meet. It's always worth haggling a little to see if you can get a bigger discount.
A back door trick. The final good use for store cards is if you're locked out of the house late at night….
Some current store card intro offers
Walk into many shops on the high street and they'll try and flog you a card with your shopping. Yet offers change, you want at least a 10% introductory sign up for it to be worth the hassle.
Some of these cards allow online applications too, the following is a list of stores and discounts, however please remember – only do this if you will pay off in full at the end of the month, otherwise don't touch it with a barge pole.
Card |
Offer |
Burtons |
10% off first shop and 10% off all online orders |
Debenhams |
10% off for a week in store and free online delivery Open online and get 10% off all store purchases |
Dorothy Perkins |
10% off for 3 months including sale items |
Evans |
10% off first purchase £5 reward voucher with first statement Double points for first 3 months |
Laura Ashley |
20% off first purchase 500 bonus points on first order (equals £5 voucher to spend in store) |
Miss Selfridge |
10% off first purchase |
New Look |
15% off first purchase 20% off voucher in welcome pack |
Topman |
£10 voucher in your first statement (when you spend over £40) + 10% off items during the first week of Summer or Christmas sale (when spending on card) |
| Topshop |
10%/15% off first shop when spending over £40/£80 + £5 voucher in your first statement + 10% off items during the first week of Summer or Christmas sale (when spending on card) |
Warehouse |
20% off on first purchase and
20% off in welcome pack when you spend on card on day of opening |
Think before adding the 'insurance'
Payment protection insurance is commonly sold with credit cards - the idea is it'll make some payments for you, usually for a year, if you are unable to (eg, if you lose your job).
There have been a myriad of cases where it has been missold eg, borrowers didn't realise they were signing up for it, or it was totally unsuitable for them, and some big lenders have been fined.
The protection isn't always bad, though policies sold with cards are often overpriced (you pay a monthly amount depending on the size of your balance). If you want it, compare the lender's cover with standalone providers such as Paymentcare or Best Insurance.
Always be vigilant to check you aren't getting more than you bargained for when you fill in the application, then check your statement each month to check you aren't inadvertently paying for extras if you didn't ask for them.
Will it hit my credit score?
Signing up to lots of store cards (or lots of credit cards for that matter) can damage your ability to gain new credit, yet if you've a good credit score there's no need to be unduly worried; there are no hard and fast rules, but many have successfully applied for more than ten cards with no problem.
It's not how many, but how often that counts.
Each time you apply for a card, a search is added to your credit file. Lots of these in a short space of time will shoot down your credit score; the overall number of applications is less important than the frequency.
If you're grabbing discounts, spread applications out every few months or so and cancel old cards; don't just cut up any card you won't ever use again. Other factors that count include total debts, repayment history and income.
Pick applications wisely and never bag a store card intro discount just before needing credit elsewhere – this includes applying for a new contract mobile phone, car or home insurance, as well as loans, mortgages or credit cards for borrowing (read Your Credit Rating How it Works).
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