Retailer-branded cards are fighting for market share from other credit cards, but are they worth comparing? RateCity investigates.
May 27, 2010
We are constantly bombarded with options for both credit cards and store cards -just open up your letter box for promotions on credit cards or walk through your favourite department store where someone is bound to hand you a flyer about their store card. But how do you know which is the better card for you?
What’s the difference?
Both types of cards offer customers with an opportunity to buy now and pay later; however there are a few unique differences between the two.
A credit card is a plastic card with a magnetic strip that people obtain through financial institutions to purchase goods and services as well as withdraw cash. They are issued with credit limits and both purchases and cash withdrawals incur interest rates. Some also provide points for spending money on the card.
A store card is similar to a credit card in that it is used to purchase items on credit however they can only be used within a particular store or range of stores, for example the Myer Card can only be used at Myer stores and charges a high 21.99 percent per annum at the time of writing.
But as our love of credit cards grows some larger retail chains are upgrading their store cards to offer a credit card with Visa, MasterCard of American Express so that you can use them anywhere which means more often. The GE Money Coles Group Source MasterCard, David Jones American Express Credit Card and Woolworths Everyday Money Credit Card are some examples, you can use them virtually anywhere and there are often bonus promotions for using the card at the card’s branded retailer.
So how to choose which type of card?
With so much choice, here are six tips to follow that may help you in deciding which card is best for you and your lifestyle:
- Compare credit cards online to find a credit card that offers a low interest rate and more rewards.
- Look at the reward programs on offer and see which one will suit your spending habits.
- Look at the way you shop, if you regularly shop at one store and it offers a store card or credit card perhaps look at the benefits you will receive versus a standard credit card.
- Look out for a card that offers longer interest free days which gives you a period to pay back the balance of your card without paying extra.
- Look for a card that is more readily accepted so you won’t be limited to where you shop.
- Does the card charge an annual fee? If you don’t pay off your balance in time each month it may be worth paying an annual fee to receive a lower interest rate.