The Complete Guide to Store Cards

What is a store card store cardsHow many times have you gone into your favourite shop, got to the till, and been offered a store card by the cashier?

It’s probably quite a few, and you might well have a purse full of the things.

Store cards are easy to get, easy to run up a bill on, but due to the high interest charged by retailers, notoriously hard to pay off.

Here’s our lowdown of how to play it smart with your store cards.

What is a Store Card?

Store cards are a special form of credit cards: you can use them only in the chain of stores which has issued them.

They are not the same as a loyalty card because they actually entitle you to buy products on credit, as well as getting cash back, points, or other benefits from the store.

If you get a store card from Oasis, for example, you can buy that gorgeous little black dress on credit, there’s a 15% discount as a welcome treat, and card holders also get free delivery when shopping online.

It all sounds good, doesn’t it?

What Are the Benefits of a Store Card?

Stores expect to make a lot of money from customers with their store cards, and so they’ll line up some great introductory offers to make you want to sign up.

You might get a welcome discount or discount on subsequent purchases, double loyalty points, free delivery, invitations to special shopping events, and more.

If you are smart, you can use a store card to your advantage: sign up, take the benefits, and pay off your store card in full at the end of the month.

If you’re making a big purchase – that incredible pair of Manolo Blahniks you’ve been saving up for, for example – you might well be able to get a significant discount by signing up for a store card at the till.

What Are The Drawbacks of Store Cards?

what is a store card store cardsThe crisis point comes if you can’t pay off your store card at the end of the month, because then the interest starts mounting up rapidly.

You must beware, store card is a form of debt. Store cards tend to charge a higher interest rate (APR) than credit cards, and are thus one of the most expensive ways to borrow money out there.

It’s fine to use a store card and pay it off, but it is disastrously expensive way to borrow money in the longer term. You can read more on APR in our handy guide on What is APR?

If you take a look at the APR currently being charged by major high street retailers for their store cards, you will be paying anything between 20% and 30% in interest.

In January 2016, New Look was charging 28.9% on their store card.

This means that if you went into the store, picked up an outfit for the weekend costing £100 and paid for it on your store card; it would cost you £100 if you paid off the amount within the first month, £102.41 if you paid a month late, and £108.60 if it took you six months to pay.

The amount payable goes up every month, and the longer you leave it, the less of a bargain your original purchase looks.

The easiest way to calculate APR is to use an online APR calculator such as the ThisIsMoney APR calculator.

Will It Affect My Credit Rating?

Your credit score (also called credit rating) is the figure used by lenders to work out how likely you are to pay back what you borrow, and therefore what level of interest they should charge you to cover the risk that you default.

As a rule of thumb, the lower your credit score, the more interest you will have to pay.

Every time you apply for a store card, the credit agency managing the application process on the store’s behalf will run a credit check on you.

These checks show up on your credit file, and if there are a lot of checks in quick succession, your credit score may be reduced.

As long as you pay off your store card each month, the impact on your credit rating should be positive or neutral.

If you fail to pay, however, and the amount you owe starts increasing as the interest charges are applied, this will damage your credit score, making it harder for you to borrow money (including in more sustainable ways, such as a bank loan or mortgage) in the future.

As a rule of thumb, the lower your credit score, the more interest you will have to pay. Click To Tweet

Do You Need a Store Card?

Remember – a store card is a form of debt and like all debt, should be at best avoided and worst handled with care. If you are responsible in the way that you apply for, use and pay off your store cards, you can certainly reap the benefits.

Before you apply for a new store card, or charge a purchase to it, however, ask yourself: Do I have enough money to pay for it this month?

If I do miss the interest free payment deadline, how much more will this pair of shoes/handbag/dress cost me?

Is it worth the extra amount, and how will I afford to pay for it? The more you ask yourself these questions the more money savvy you become.

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Over to You

What are your experiences with using a store card? How did you find meeting the regular repayments on your store card? Was it worth it in the long run? We’d love to hear all about your experiences.

This post is part of the Debt Management series, you can read all posts in the series here.



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  1. I’ve always stayed well away, I got sucked into catalogues years ago and now only spend the money I have or save up.

  2. chantelle hazelden says:

    very helpful post!

  3. my mum warned me about store cards way before I was old enough to have one! I only ever got one once and that was because they gave me 20% and I had just bought a new coat and boots so was spending a lot. I put the money aside I was going to use and paid it off straight away and closed it down!

    1. Brilliant. This is a smart way to handle a store card. Be a savvy spender by taking take advantage of the benefits and paying off the store card in full.

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