
Store Credit Cards Traps That Should Be Avoided

The world of credit cards is huge and so is the debt and a number of retailers have been issuing store credit cards as a method of promoting their business. Unwary customers are applying for the credit cards believing these are just loyalty cards which will bring a set of benefits for them.
Unfortunately, customers do not understand that store credit cards are often the reasons were major trouble with credit. Stores have easy application processes and charge exorbitant rates of interest. They are crashing in on the customer’s belief that the card can be used in any store without divulging information that the card can only be used in a specific store or a group belonging to them.
What is a store credit card?
A store credit card is just a credit card which can be used at the issuing store or in a group of outlets belonged to the store. They should not be confused with loyalty cards which allow customers to collect points when they indulge in purchases. Store credit cards are allowing customers to borrow money and customers are warned not to believe that the store is doing any kind of favor on them because high-interest charges will become inevitable if customers are not careful with their spending. Stores are generally making their cards appealing enough by displaying products to persuade shoppers to purchase more.
What is the problem with store credit cards?
Store credit cards are easy to obtain and promise customers a number of great deals and discounts. The reality is entirely different because people who are signing up are paying exorbitant rates of interest on the purchases they make. The interest charges are exorbitant and the accessibility is relatively easy. Customers can sign up for a store credit card at the checkout counter and begin using the card right thereafter.
Exorbitant interest rates charged by stores
Most store credit cards are charging over 25% interest which is higher and less competitive than a credit card. Many cases have been observed where store credit cards are charging around 30% interest which is about the standard charges.
Problems with credit history
Retailers are not going through a credit check before issuing a store credit card to the customer. This may sound great for some people but the store is actually allowing people who do not have the funds available to get into a debt situation which they cannot afford without giving reasons for the consequences. When customers apply for a store credit card a noting is made on their credit file. Customers who apply for several store credit cards within a short period of time will notice a drop in their credit ratings and will have difficulties in getting credit during the future.
Store credit cards are available for all
A number of people find store credit cards convenient because they have been unsuccessful in obtaining a standard credit card. Store assistants are often untrained in financial matters and are offered incentives when they sign up customers for the cards. In such cases people without adequate incomes often find themselves spending more money by using the cards issued by the store and incurred debts which they can ill afford. Store credit cards also ensure loyalty to the store which issued the card.
How can shoppers stay away from store credit cards
After considering this discussion shopper should be ignoring store credit cards altogether and not obtain them unless they are certain they can pay off their entire spending on the due date. They should be prepared to overlook any discounts that may be offered for making purchases with the use of store credit cards. Most importantly shoppers are required to understand that the store is not offering them a loyalty card and this is just a ploy to tie down the customer to shop at a particular store with the help of the store credit card that has been issued.
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