This episode of the Your Recipe for Financial Success podcast was published on 19th November 2020. You can listen again by heading to our Episodes page, or on your favourite podcast player.

In this episode, Becky, Emma and Julie explain everything you need to know about store cards. If you’re not entirely sure what the deal is with store cards, settle down with a cuppa, we’re about to bake you up a treat!

Episode Highlights

87.9 million people in the UK use a store card. The question is, do they all understand how they work?

What is a store card?

A store card is basically the same as a credit card, but you can only use it in one high street chain or a group of stores that are perhaps owned by the same company. You purchase your goodies on the card and pay for them later, with added interest.

What you need to know about store cards

• You must be 18 to have a store card
• When you apply for a store card, you have to undergo a credit check. You don’t have to have any credit history to be accepted for a card, though
• It’s important to remember that store cards often have a higher interest than ‘normal’ credit cards
• There are often special offers and discounts on offer when you sign up for a store card. Whether that is in store or online
• It’s worth bearing in mind that store cards are often given out by sales assistants who may not fully understand the implications of what they are telling you to sign up for

Charges and costs of store cards

When you’re looking at the interest rate on your store card you need to be looking at the annual percentage rate, which is usually abbreviated to the APR. This is the cost of borrowing, for example, 28.9% APR. 

You will then be charged a minimum set percentage or fee depending on the terms of your store card. For example, 3.65% of your balance or £3.65, whichever is higher. 

You could end up paying back more than you spent on the card. Say you bought something for £100 and pay £5 back a month on a 28.9% APR rate, it would take you 17 months to pay back and therefore you will end up paying a total of £132. 

Remember, the rated on cards are variable so that 28.9% could increase over the time you are paying back the balance of your card.

What if you get in a muddle and can’t afford the repayments?

If you get in a little trouble with your store cards and can’t afford the repayments, there are a few things you can do: 

• Call the lender and ask if you can take a payment holiday. This will pause the interest charges for a month to give you a chance to catch up.
• Another thing that you can do is speak to Citizens Advice, because they can provide you with free impartial guidance to hopefully point you on on the right tracks.
• Speak to a charity like StepChange. They may be able to help you sort of get out of the position that you’re in.

Check out our other delicious podcasts on our episodes page if you would like to get your teeth stuck into even more tips and information on personal finance. Don’t forget about our Facebook page too where you can ask questions and join in discussions about all of our topics!

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