Although store credit cards gives the user more discounts and help save money on purchases, they may also cause impulse buying by the naive thinking that the more you spend the more you save. So do store cards really help to save money?
A store card is a great way to enjoy more discounts on goods purchased at your favorite department store. It is not surprising to find multiple store cards issued by all the major departmental stores in the wallets of some people, especially those who shop every weekend. On the surface, store credit cards help departmental stores to gain loyalty from regular shoppers by offering some exclusive store offers, loyalty points and rebate discounts etc to cardholders. These exclusive benefits are not available to the general public, so you need to sign up for a store card to be eligible.
However, more so than any normal cards, these can lead to those with poor spending habits or budgeting problems to struggle with debts. If you do not settle the card balance in full, the high APR on balances with snowball and increase your credit card debts very fast, outweighing all the discounts or rebates you can possibly get from the card.
In reality, retailers make use of store credit cards to boost sales from its customers. The meagre store discounts and loyalty points given will help them make more money from their members. Many consumers are enticed to sign up for such cards because of freebies, such as a $50 voucher. However, store cards can become a trap for impulse purchases because you are offered both discounts and credit, so you can buy items which you cannot afford.
When you have overspent on purchases using your store credit card, you may not be able to pay the balance in full within the interest free grace period. Thus, you end up making barely the minimum monthly repayment on your cards and the high interest rate will cost you a lot of money until you find some way to pay off the entire card debt. Do not be surprised that carrying credit card balances are just as expensive as bad credit installment loans.
For any type of credit cards, if you can only afford the minimum payment every month, you are not doing anything constructive about your credit card debts. With the average interest rate on card balances at a high 24%, impulse purchases using store credit cards can get very expensive. It is important to spend only the amount you can pay off completely within the grace period. To stay of out money troubles, use store cards to enjoy the cash rebates and never to buy any items which are not really needed or unaffordable.
It is true that getting a store card can help you benefit from loyalty points and store discounts, especially on cheaper groceries and daily necessities. That is what many savvy moms have been using to manage household expenses on a tight budget.