A guide to store cards

There are advantages to having a store card, especially if you’re a loyal customer. Find out how they work, their pros and cons, and whether they’re the right option for you.

Eve Powell
Eve Powell
Updated 24 May 2022  | 3 mins read

Key points

  • A store card can only be used to make purchases with one particular retailer
  • They usually come with a sign-up discount, store perks and regular shopping offers
  • Credit limits are typically lower than standard credit cards and the interest rate is often much higher
  • You’ll need to pay off the balance in full each month to make the discounts worth it

What is a store card and how does it work?

Store cards are a type of credit card provided by high street stores or a chain of retailers.

They’re branded with the same logo as the store and usually offer discounts and loyalty points.

Just like an ordinary credit card, you can use them to make purchases and pay for them later. If you don’t pay your balance in full, you’ll be charged interest.

The difference between a store card and a credit card is that you can only use a store card to buy things in one store or group of shops.

Although you can apply for a card in your favourite store, they’re still a serious financial product. So, it’s important that you only spend what you’re comfortable paying off each month.

What are the pros and cons of store cards?

Although store cards are similar to credit cards, they don’t work in exactly the same way, so it’s important to swot up on them before filling out any applications.

  • Pros

    The benefits and perks can include:

    • Store cards are easier to be approved for than most credit cards
    • There’s often a sign-up discount which could save you money on a big purchase
    • Receive regular discounts and special offers from the store
    • Some cards provide free delivery with purchases
    • Invitations to exclusive shopping events and early access to sales
    • Most store cards don’t have an annual fee
    • Using your card responsibly can help to build your credit rating
  • Cons

    The drawbacks include:

    • Use is limited to one store or chain of stores
    • Higher interest rates, with the APR typically ranging from 20% to 30%
    • They usually have low credit limits compared to standard credit cards
    • Discounts and offers can encourage you to overspend
    • Typically, there’s no introductory interest-free deals on purchases
    • They’re not the best option if you want to spread out the cost of your spending
    • If you don’t pay off your balance in full each month, the interest might cost more than the discounts

Charges and fees

Store cards usually charge much higher interest rates than standard credit cards.

That’s why it’s important to check the annual percentage rate (APR) before you sign up.

It’s always best to pay off your store card balance in full. Failing that, try to make at least the minimum monthly repayment, but ideally pay more than this if you can.

If you don’t pay at least the minimum payment you'll be charged a fixed late payment fee, which is usually around £12.

And if you spend more than your credit limit, you’re also likely to be charged a similar fee amount.

Do store cards count as credit cards?

Although they work differently from credit cards - in that they can only be used in the store or chain of stores your card is from – they’re still a type of credit card.

They allow you to buy things upfront on credit and then pay that amount off, or a portion it, by the end of the month.

Just like credit cards, you can spread the cost over a number of months.

However, because of their high interest rates, the best way to use a store card is to always pay the balance in full so you can make the most of the discounts they offer.

What if I miss a payment?

Just like a standard credit card, if you miss or are late with a payment on your store card, you’ll be charged a late payment fee.

A late payment can also affect your credit score, as overdue payments may suggest you’re having financial difficulties.

If a late payment is recorded on your report, it will stay there for six years. But the impact it has on your credit score will reduce over time.

It’s always best to avoid a late payment, but if you’re struggling you should contact the card provider as soon as possible as they may be able to agree a temporary solution with you.

Can I use a retail branded credit card anywhere?

Yes, whereas a store card can only be used at a specific store, you can use a retail branded credit card anywhere that accepts credit cards.

This means they provide more flexibility than store cards and can also give you more benefits and incentives.

Can I get an interest-free period on a store card?

No, you won’t be given an interest-free period with a store card. Instead, the introductory offer will typically be in the form of an immediate discount when you take out the card.

Bear in mind that the interest on a store card is usually much higher than a standard credit card.

For this reason, if you don’t think you’ll be able to make your card payments in full each month, you should consider taking out a different type of card as the interest charged will likely wipe out any discount received.

Can I transfer my credit card balance to a store credit card?

Although you can’t move existing debt to a store card, you may be able to move it to a retail-branded balance transfer credit card.

Taking advantage of 0% interest offers on balance transfers can help you to pay off debt more quickly.

However, you should also shop around and compare credit cards.

A non-retail branded credit card may give you a longer interest-free period and offer a lower APR, along with other additional benefits.

What are the alternatives to store cards?

Depending on your situation, other card options might work better for you and your spending habits.

  1. Reward cards

    Use these cards to earn loyalty points, shopping vouchers or cashback every time you spend money. Interest rates are high, so they’re only really suitable if you can pay off the balance in full every month.

  2. Retail-branded credit cards

    These often have a lower APR than store cards but can still give you shopping perks. You earn rewards by using them anywhere credit cards are accepted, but you’ll earn more points when you spend in the store linked to the card.

  3. 0% purchase credit cards

    If there’s an expensive item you’re planning to buy, a 0% purchase card can help you to spread the cost. These cards typically offer an interest-free period for new purchases and can last up to a year. Pay off the balance before the introductory period ends to take advantage.