Like a credit card, a store card can be used to purchase goods/services on credit – provided you pay the incurred costs back at the end of the month, or in small repayments over a time period stated by the stores’ terms and conditions. Additionally, you will be charged interest on any amount that is still outstanding come month end, with the interest rate usually even higher than for a credit card. You must be at least 18 years old to obtain a store card, whilst also undergoing a credit check to see if you qualify for one.

You are able to cancel the card within a 14 day period, but you will not receive a pre-existing discount to apply to your initial purchase as firms have agreed to not offer deals within seven days of purchase. However, if you take out a card, you may be offered vouchers or discounts – such as 10% off purchases for three months, or free delivery when you purchase goods online. These incentives aim to encourage you to use your credit limit.

There are a few documents that are required to complete your application, typically the same ones that you would submit when applying for a loan. Make sure you have these ready:

  • ID Document
  • 3 Months’ Bank Statements
  • Proof of Residence

 

What Are the Advantages of Store Credit Cards?

If you are looking to build a good credit score, store cards may be a good place to start. The reason being that it is fairly easy to qualify for one, however, it is worth noting that you will be solely responsible for any actions the card is used for. If you want to improve your credit score, be sure to keep the balance low and make your monthly payments on time. If possible, pay off the card in full each month.

Another advantage of a store card is that it gives consumers the ability to collate points for items they would already be buying, reducing future costs they may incur, as well as the ability to claim cashback and discounts on store items.

 

What Are the Disadvantages of Store Credit Cards?

There is a level of self-discipline required when it comes to owning a store card. If you can be disciplined and pay off the card in its entirety every month, then it may work to your advantage. Some people will make the charges on the card and then go straight to the customer service desk to pay off the balance in full.

Another disadvantage of using a store credit card is that people spend more money when items are on sale, or when they are getting a discount for putting their purchase on a card. If you work within a strict budget per month for clothing, and you then put a purchase on the credit card and end up spending even more to save on the discount, you still overspend the amount that you had set aside. Since you are putting it on a card instead of paying cash for it, it is easier to let yourself overspend consistently, which will drive up your balance.

It is important to remember that a store credit card is a tool, and if you do not use it correctly, you may lose all of the advantages of having one. The percentage you save or the rewards you earn are not worth the interest you are paying if you do not pay off your cards quickly. Refrain from using the card if you know you will not be able to pay it off soon. Learn more about Store Card vs. Credit Card in South Africa