You will often find that when you shop in certain places they will try to encourage you to get a store card. This is like a credit card where you can buy things and pay later.
Find out what savings can be made
Often the shop will give you some additional benefits of having a store card. It might be that you get some money off when you make purchases with it, you get early information about sales, you can attend special evenings or other things. Ask the shop assistant about the benefits of the card before you sign up because it is important to know whether it is worth having one. If there are few benefits then it may not be worth the hassle.
Where can you use it?
Some store cards can only be used in the specific shop that it was issued in. This can be rather limiting. Of course, it is likely that it can be used in other branches of the same shop, but you may not have any other nearby. Some shops belong to a big chain and you can therefore use the card across a selection of shops. This can make it more useful as you are not so restricted.
Compare it with a credit card
It is well worth comparing the store card with a credit card or even a short term payday loan. The store cards tend to be more expensive and so if you do not intend to pay off the full balance each time then you might be wiser to get a credit card because it will be cheaper for you. There may be other differences between the cards as well, such as the charges that are made and when and how much they are. Do check out the main features so that you can compare them more easily.
Consider whether you will spend more
If you have a store card for a specific shop then it could encourage you to spend more in that shop. This might mean that you buy more than normal because you can put it on the card. Or you might visit the shop more compared with alternative shops and buy there instead. If this shop is cheaper then that could be great and could save you money, but if it is dearer it may mean that you are paying more for items than necessary.
Is it bad debt?
The main problem with having access to ore credit is that it could lead to you getting into more debt. If you are the type of person that will set up a direct debit to pay off the full outstanding balance when it is due, then you will not be at risk of getting into debt. However, many people will not do this and wait until the bill arrives and then decide how much they might pay off and it could be the minimum amount. Then they will be charged interest on the remaining balance and they will start accumulating debt.
Debt is not always a bad thing, but if you are buying items you do not really need and just delaying paying for them. Not paying in full because you do not want to bother with it or not using the cheapest form of debt then you are not acting wisely. If you have compared all of your options and feel that what you are buying justifies the interest that you will be charged and you cannot get a better deal by borrowing in an alternative way, then this debt could be the best option for you.
Will it lead to more debt?
Sometimes we can get ourselves into a debt spiral. We can borrow money for something and then it is easier to borrow it for something else. We might find that our interest payments are so high that we need to borrow more money to afford to pay them alongside our other bills. If this happens you will eventually run out of available credit and find yourself in a situation where there just is not any money to pay for the things that you need.
It is therefore wise to think about what sort of person you are and whether it is likely that getting a card will lead to you getting into more and more debt. It may be hard to know if you have never had a card like this before. You should be able to imagine how you will use it though, whether you will make sure that you can afford to pay it all off each month and whether you will be careful with the amount that you spend on it, for example. You need to make sure that you do not think of the card as free money that you can just spend on things that you like but just a way to defer paying for items for a while, which you will have to pay extra for if you do not repay the bill right away when it comes.
