Many of us have store cards. These are rather like credit cards but you are limited to spending them in certain stores. They will mainly be just for one shop, although if some shops have other stores in the same group then you may be able to use the card with them as well. The cards act like credit cards where you can wait to pay for the items that you have bought until you get your statement and you will then get the option of repaying it in full or just paying off a small amount which will usually just cover the interest and perhaps a little more. Using the cards is easy but for some people, repaying it is difficult. There are some tips below to help with this.
Set up a direct debit
When you first set up a store card it is wise to also set up a direct debit to pay off the full balance owed each month, just like you would do with other types of credit. This will mean that there is no chance that you will forget to pay for the card. You might prefer to just set one up to pay off the minimum amount. However, if you do this, you will be charged interest on the remaining balance. If you repay the full balance you will not pay any interest or fees at all. It is therefore best to set up a direct debit to repay the card in full each month. It is easy to set up a direct debit and you should find that your card issuer will have an easy form that you can use to be able to do this. There is therefore no excuse for not doing it!
If you do intent to repay each month in full, then you will need to make sure that you will be able to afford to do this. You will need to make sure that you do not spend so much that you will not have enough money to repay it. You might be able to keep track of your spending online using an online statement. If you cannot do this then you might be able to track it using your receipts or just by making a note of how much you are spending. You will need to be aware of how much you can afford to spend so that you know how much to spend. You will have to work this figure out. To do this you may find it easiest to look back over previous bank statements to see how much money you have left over each month and therefore how much you can afford to spend on your store card. Then you will need to make sure that you stick to your budget.
Pay off in Instalments
If you already have outstanding store card debt then it is wise to try to repay it as quickly as you can. If you have the money available then it is worth just doing it because you will save so much money on interest charges which you will be paying each month. This may not be something that you can afford though. If this is the case it could be wise to stop spending on the card until you have repaid everything. It is easiest to spread the repayments and therefore pay a bit off each month. Repay more than the minimum required repayment or else it will take a really long time to repay the whole card. You could set up a direct debit to pay an amount which you know will be larger than the minimum payment but that you can still afford. You may have to look back at your previous spending to see how much you will be able to afford.
Although store cards can have a lot of benefits, it is worth thinking really hard as to whether it is worth having them. If you take advantage of the offers and only spend what you would have spent anyway and repay the balance all in one go then they can be a fantastic choice. However, if you are tempted to buy more than you need because you can use your store card and delay repaying it, you do not pay the full balance off each month and you find it a struggle when considering repaying what you owe, then a store card will work out to be very expensive for you. If you have been in this situation then it could be wise to consider getting rid of the store card or not getting one, if you have not already got one. You have to be really self-disciplined with money to take advantage of a store card and you should know whether it will be a good idea for you to have one based on how good you normally are with money.