How do they work?

Store cards are a type of credit card that only let you spend money at a particular shop, or retail chain, and pay it back over a term that suits you.

Some store cards offer money off your first purchase, but most charge interest on what you spend.

Store card pros & cons

  • Discounts available

  • Can offer other in store perks

  • High interest rates & fees

  • Can only use in one store

The main advantages of store cards are the discounts and in-store benefits they offer.

However, if you don't pay off your balance each month, you are likely to pay higher interest charges than the benefits you'll get.

How much do they cost?

Store cards charge the same fees as other types of credit cards, including:

  • Interest on any outstanding balance left on the card

  • Fees for late or missed payments

  • Charges for exceeding your card limit

However, store cards often have higher interest rates than other credit cards making them more expensive.

What is a store branded credit card?

It is a credit card associated with a particular store, for example John Lewis.

These cards can be used anywhere, and may offer better incentives to shop than traditional store cards.

What incentives could you get?

The benefits vary depending on the card you apply for. Here are some examples:

  • Money off your purchase: This could be a set amount, or a percentage taken off your bill, however it usually only applies to your first purchase.

  • Pay nothing back at first: Save on repayments for the first few months, then start paying back the balance with interest.

  • Loyalty points: Build up points by spending, and exchange them for money off another purchase in the future.

However, these cards may charge a higher interest rate than standard credit cards, making them an expensive way to spend.

Is there a cheaper alternative?

You could apply for a 0% purchase credit card, which does not charge interest on what you spend for a set term, e.g. 0% on any purchases made in the first 12 months.

You only need to pay off a small amount off each month, called the minimum payment. This is usually a small percentage of your remaining balance, e.g. 2%.

When the 0% term ends, you will pay interest on any outstanding balance. The 0% term on a purchases credit card is likely to be longer than what a store credit card could offer.

Unlike a store card, a 0% credit card lets you spend with any retailer online or on the high street, making shopping on one card simpler.