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RETAIL reward credit cards are the same as any other standard credit card issued by a bank or building society and they can be used as such.
The only difference is that, similar to cash back or flyer miles, retail reward credit cards offer retail specific rewards on spending made with the card.
Store cards however, offer credit only on purchases made from a particular store or retailer, or a particular chain.
The main differences between retail reward credit cards and store cards are:
- Retail rewards credit cards can be used anywhere (where credit cards are accepted) whereas store cards can only be used at certain chains or shops.
- Retail rewards credit cards can be used to make cash transactions whereas store cards can only be used to make purchases.
- Retail rewards cards offer a range of rewards depending on the card, whereas store cards offer discounts off purchases at that store or chain only.
- Store card credit is often much more expensive and it’s typical to see very high rates of interest on these cards. Whereas retail reward credit cards generally offer the same competitive rates of interest as other non-reward based credit cards.
Retail rewards cards V store cards
Retail reward credit cards
Although some people think that store cards and retail reward credit cards are the same there are some huge and very significant differences that need to be considered.
Basically, a retail rewards credit card is a credit card available from a number of card issuers that offers the flexibility and convenience of a regular credit card with the chance to earn rewards and discounts at specified retailers through the use of the card.
Your retail rewards credit card can also be used to withdraw cash and make cash transactions, although no rewards will be earned by doing this.
Store cards
A store card, on the other hand, is a far more restricted form of credit.
Store cards are offered by most major department stores, such as clothing retailers and electrical retailers.
With a store card you can get credit at a particular retailer or chain depending on which store card you have, so these cards are far more restricted than a regular retail rewards credit card.
You cannot use the card to make cash transactions or withdrawals - as the name suggests this is a store card and therefore can only be used in store.
You will find that store cards typically charge a higher rate of interest than credit cards. Although, like credit cards you can avoid getting charged interest yet still accrue benefits and discounts if you pay off your balance in full each month.
Which should I choose?
If you're after a payment method that will earn you rewards or money-off with your favourite store and have a good history with credit - you will probably benefit a great deal more from a retail reward credit card.
Not only will the rewards be more bountiful - but you'll usually be able to earn them on all your spending - not just on purchases at one shop, which will in turn allow you to clock up points faster to redeem on freebies such as shopping vouchers or free gifts.
If you're not particularly good at managing your finances and often see yourself rolling a balance over from month to month - or worse, deepening your debt - you should probably steer clear of taking out new credit at least until your current debts are repaid.
If you are no longer in the red but your credit history is not looking too great, it may be a wiser move to focus on improving your credit score first.
Opting for a poor credit history credit card to help to improve and rebuild a low credit score – and simply by really getting to grips with your finances and improving your credit score by getting on the electoral roll, making sure you meet all service and utility bill payments on time, checking your credit report for any correctable mistakes, and working on the balance in your current or savings account.
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