5 need-to-knows about store cards

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A store card works like a credit card but you can only use it at one retailer and the cost of the credit is usually higher if you don't pay the balance off at the end of the month. We'll look at the myths and truths surrounding store cards, how to make them work for you and what pitfalls to avoid.

What's the benefit of having a store card?

Store cards provide extra discounts and deals on brands you regularly buy, but come with higher interest rates than most credit cards. The best strategy is to get the card, enjoy the discounts, repay the balance in full and move on.

Who offers them?

If you shop at high-street stores you may be asked if you would like to take out a store card when you are at the till. Common UK store cards include ones from Topshop, Argos and Debenhams.

How are they similar to credit cards?

You can spend before you have the actual cash and as long as you repay your balance in full, it won't cost you anything. Like a credit card, you must be 18 or over to get one.

And dissimilar?

Unlike a credit card, 0% or low interest deals are unheard of, so if you use one and don't repay it in full straightaway, you'll be charged interest, typically between 25% and 30%.

Store cards are easier to obtain than credit cards and are often the first form of credit a young person gets.

Here are the five need-to-knows about store cards:

1. The interest is higher

This is the main drawback of store cards compared to other ways of borrowing. Most store cards charge an Annual Percentage Rate (APR) of 25% or more.

2. You don't get 0% interest deals

Unless you have a very poor credit rating, you should qualify for a credit card at a lower rate than the 20% - 30% rate attached to most store cards. Ideally, if you can qualify for a 0% rate on purchases, you'll pay no interest on borrowing for the duration of that deal.

3. Get initial purchase discounts

To reduce mis-selling, firms now don't offer deals in the first seven days. After this period you receive exclusive offers only available to store card holders like free online delivery.

4. Not all store branded cards are credit cards

Most major supermarkets offer store-branded credit cards. These are not store cards because they can be used anywhere. Rewards cards like Nectar allow you to collect points for shopping to get money off your bill. They don't allow you to buy now and pay later.

5. Cashback credit cards might be a better option

Some pay cashback on all purchases, so you get a discount on all credit card spending. This may provide a greater benefit than a store card.

So, what are the pros of store cards?

  • You get exclusive discounts and money-off vouchers at your favourite retailers
  • You can get free postage and delivery costs on online orders
  • Get exclusive early access to sale events
  • You can buy what you want when you want it

.. and the cons?

  • You pay more for the cost of the credit if you don't pay off your store card in full each month
  • You can only use them to buy items at one particular store
  • They are often sold by sales assistants on commission who may not be able to accurately explain how the credit works
  • If you apply for too many at once, they can lower your credit rating

What now?

To find out more about how to use store cards effectively, check out MoneySavingExpert's guide on how to play the system and win.

If you are struggling with store card debts, StepChange, or PayPlan are free and impartial debt charities that can help.


Our articles cover a wide range of mainstream financial products and employee benefits. Terms and conditions of each product may vary depending on your provider. Please ensure you check the specific terms and conditions of any financial products and employee benefits available to you from your employer.