What are store cards?

Store cards are one of the first cards that many credit card holders will get, but it can pay to understand what store cards are how they make their money.

Store cards are cards that are offered by stores and other brands, such as airlines, where they can offer the credit card instantly.  It will often be offered to a person who is buying some goods at the store at the time, together with offering a discount on the first purchase with the store card.  These store cards can be very good for these types of discounts, but they do tend to charge a high amount of interest.

The most important thing to understand about a store card is the convenience that these cards offer.  This convenience also means that there is comparatively less choice.  If someone is looking at direct mail offers for credit cards then they will usually have at least one offer that has recently been sent to them to compare, if the person is looking on the internet then they will have a very wide choice.  However with a store card it is very hard to find out what other credit cards are offering, so it can be easy to get a card with high interest rates and worse conditions than many other credit cards charge.

Another feature of this convenience is that the store cards do far less credit checking.  The store cards tend to be offered to a large range of applicants.  There is minimal credit checking as although application forms will ask for income, it is not possible to do more than a minimal check on the credit score and it is not possible to check that the income is accurate.  This will mean that there are a large number of people accepted for these credit cards, and this will mean in turn that the credit cards are going to have a higher interest rate than on average.

One area where the store cards do tend to do well is that they can be in a good position to offer rewards.  These rewards are usually in the shape of discounts to the shop or if services are provided then they can be in the shape of free upgrades.  These are very useful to people who are regular customers at the store or service provider that is offering the credit card, but can be of limited use to less frequent customers.