Store cards and credit cards are quite similar and it can sometimes even be difficult to see what the differences are between them, if indeed there are any. They do all differ depending on who issued them and so there are not definite features for one, rather than the other in most cases. However, there are some main differences which it is worth knowing about so that you can choose which, if any, is the best for you to pick to use.
What is a store card?
A store card is issued by a specific store ad will allow you to shop at that store using it rather than cash or other methods of payment. The card is usually exclusive to that store and so can only be used at that store or any other branches of it and perhaps also any parent or sister stores or ones owned by the same parent company.
The way that a store card works is that you will be allowed to use it to purchase items from the shop rather than using cash, debit card or credit card up to a certain limit. You will not have to pay any money until you get your store card bill, which could take up to a month to arrive. Then you will have a number of weeks before you have to pay. You will have the choice of paying an instalment, which is normally the interest charged on the borrowing plus a little extra or the whole balance without any interest charge. Whichever payment you choose, you will have to pay it by a certain date. If you choose to pay off everything your spent, then there will be no charge, so you will get interest free credit. However, if you only pay the minimum, you will be charged interest and the amount of interest charged will vary depending on the interest rate on the card. These vary between store cards and tend to be a bit higher than credit cards. They are also variable which means that they can change at any time but will be certain to go up if the base rate increases, although will not go down if the base rate falls.
The advantage to having a store card compared with a credit card is that they may offer you additional benefits with the retailer. You may be able to get discounts, invitations to sale evenings, loyalty points and things like that. These incentives will change depending on the store and so it is worth finding out what they are before you sign up to one. Some may be more appealing to you than others.
What is a credit card?
A credit card is issued by a bank or building society. It will allow you to spend up to a certain amount of money and not pay for it. The card works like money and so you can buy things in most shops and online using it. You will not have to pay anything until you get the bill. The bill will allow you to either pay a minimum amount; which normally covers the interest and a little more or pay off the whole outstanding balance. If you pay off everything then there are no charges, but if you choose to only pay off some of the balance, then you will be charged interest on what you do not pay back.
Most shops accept the major credit cards and this means that you just need the one card to shop at lots of places. It can be a great alternative to carrying cash and means that you can buy things right away and not pay for them until the bill arrives weeks later. It can be a great help if you are running out of money as you may not have to cover the bill until you next get paid. There is no pressure to pay back more than the minimum and so you can take a long as you like to repay it, although the longer you leave it; the more expensive it will be.
Which is the best?
Choosing between a credit card and a store card can be hard. It may seem obvious that choosing a card that you can use in most shops and that is cheaper is the best but there may be benefits to holding a store card, such as money off offers which could be more valuable. If you plan on paying off the full balance to avoid the interest payments, then it will make no difference which card you pick with regards to the cost.
It is worth thinking about the fact that a store card could be limiting because you will only be able to use it in one store, whereas a credit card can be used almost anywhere. This means that you may end shopping more at the shop that you have the store card for and it could limit your choice and if the store is expensive compared to others, may even lead to you spending more than necessary on items that you are buying. However, if there are lots of offers associated with using the store card and it is for a sop that you use a lot, as long as you are not tempted to spend extras due to the offers, you could gain a lot form having the card.
Of course, you may decide to take out both cards; the store card to use at your favourite shop and take advantage of the deals as well as the credit card to use elsewhere. Just be careful with this option as you have a lot of credit available to you and it could mean that you are at risk of getting into a lot of debt if you do not pay them back quickly and spend a lot of money on them. However, if you set up a direct debit to pay off the cards in full when the bills come in and you keep a close check on your spending with them, you should be able to manage them both.