Storecards

donsguy

Are these easier to get than credit cards, and do companies perform credit checks on people applying for them. I ask because HMV have sent me details of their card talking about 'instant' 250 pounds spending limit, but I am trying to clear up my credit file as I applyed for too many cards over the last year which has counted against me getting decent cards.

Martinslovechild

I don't really know much about them except to say that they usually have ridiculously high APR's and low credit limits.

They're useful in stores where you're spending several hundred pounds as they can sometimes offer 10% discount on your first purchase (e.g. Debenhams), but pay them completely off when the first statement arrives otherwise the interest will more than make up for the 10% discount!!

Usually firms such as GE Capital are behind many of the store cards.

student100

Having worked several times as a temporary employee in a major retail chain* and having to offer every customer a storecard as part of my job, I learned a bit about these. Obviously the company is very keen to push storecards, because they make lots of money from those people who don't pay them off straight away (ours was I think 27.9% APR), and also the fact that some customers will be "loyal" to the store if they have a storecard. Often credit is available on the spot - the customer is guided through the application form by the store employee who then phones up to put the application through. Some customers were given a provisional credit limit on the spot, others referred for further checks and then later sent details through the post. I did get the impression that sometimes people who would not have been likely to get a regular credit card were given one of these store cards, although that was just in my personal opinion.

Customers were also drawn in by the offer of "six months interest opt-out option" on purchases over £195, which is not exactly interest free credit. To this day I'm still not sure what it means, I think basically you had to make the minimum payments each month and then after the six months you got a special form in the post. If you used this form to pay off the outsanding balance, you would not have to pay the interest, but if you didn't pay off with this special form you would be liable for the full interest charges. Sneaky.

Also you can earn points when you spend on the card which you can then use for money off, but they're not really worth it.

In my opinion, store cards are a very expensive waste of time. They are designed solely to make money for the store in question whilst giving the customers a bad deal. It's no wonder staff are required to push use of the cards to every customer. (At one time we were told we had to start each transaction with "Are you paying by ##### card?", and when the customer said no we were meant to say "Would you like to know more about ##### card?"...)

Anyway, yeah, I'd avoid all store cards at all cost. Just rememember that the store employees have to ask you or they're not doing their job properly, and all you have to do is say "no thankyou".


_{* I'm not going to mention who here because I intend on working there again, but I have mentioned it before elsewhere on these message boards.}

Martinslovechild

Customers were also drawn in by the offer of "six months interest opt-out option" on purchases over £195, which is not exactly interest free credit. To this day I'm still not sure what it means.

I think there are a couple of things worth mentioning here:-

1. I was once offered 12 months interest free credit in a furniture store for all orders over £500.  I was spending about £1000 at the time which was sitting in my bank account.  I agreed to the 0% credit on the basis that I would move the £1000 in my current account to a high-interest savings account (which I did) and pay off the £1000 at the end of the 12 months (which I also did).

Some months later, I ordered my Experian credit file which showed the amount outstanding as £1349.  Basically, the amount they had written to my credit file included the full amount of interest for the first 12 months I wasn't paying anything, i.e. 34.9%.

As I ended up paying the balance after about 11.5 months, I owed them just the original £1000.  However - I phoned them a week after the payment to confirm that they had received this and asked for a confirmation letter that the account was now closed, which arrived about a week later.  I pocketed the interest on the £1000 savings (approx £40 but better than nothing!!).

2. Some storecards have no interest-free period, which can result in an interest charge on the very first statement.