Five Questions About: Store cards

What are store cards?

Store cards are essentially in-house credit cards offered by retailers including Next, Debenhams and Homebase. They generally provide upfront discounts such as 20 per cent off your first in-store purchase. However, they can prove a very expensive way to borrow if you are not careful.

How much do they cost?

Most store cards charge very high interest rates. The cards offered by Dorothy Perkins, Burton and Homebase, for example, all charge variable rates currently set at an eye-watering 29.9 per cent. The interest you pay can mount up very quickly as a result, with figures from price comparison website moneysupermarket.com showing that someone making £500-worth of purchases on a Burton store card would accrue interest of £74 over one year if he or she made monthly repayments of £48.

Where can I use them?

Store cards can only generally be used to buy goods from the retailers offering them.

Are there any benefits?

Store cards can offer some great introductory deals on special offers so if you are able to pay your card off in full each month, they are worth considering. Gardeners, for example, might consider the Homebase store card. Meanwhile, for fashion fans, the New Look store card could prove interesting thanks to its 20 per cent discount on the first purchase using the plastic.

What are the alternatives?

Credit cards can often offer consumers a cheaper way to pay for their shopping, particularly if they have interest-free introductory periods. The Marks & Spencer credit card, for example, allows customers to shop anywhere and offers 15 months interest free, after which it charges a relatively low variable rate of 15.9 per cent.