Saving Money

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Do you owe money on a store credit card with a major Australian retailer? Most Australian’s take advantage of the 24months interest free option when buying consumer electronics and furniture from makers such as Harvey Norman and David Jones - leaving them with nothing to pay now, but a large debt lieing in the grass for 24months down the track.

This article aims to look at the pro’s and con’s of having a store credit card with a major retailer and give an understanding from first hand experience what it is like to have a store credit card debt.

What are store credit cards?

Store credit, or store credit cards as they are less popularly called - allow for consumers to purchase products within the store on credit, via a simple system that works no different to your everyday credit card. Retailers such as Harvey Norman offer interest free offers to take home the products you want, while waiting 12-48 months before you even have to make a payment.

Benefits of Store Credit Cards

You get what you want straight away.

Nothing to pay for 12-48 months, allowing you to save.

Interest free for the life of the loan.

Negatives of Store Credit Cards

Generally come with a much higher interest rate than a normal card.

Have a monthly fee that they don’t tell you about when signing up. Eg; $5 a month maintainence fee.

Lots of terms and conditions that can sting you.

Why do they offer this?

You must be thinking to yourself, its too good to be true! Get what you want now, pay nothing, start saving - pay off after 2 years. Well always remember that nothing comes for free. They offer this service to allow consumers who would otherwise be unable to spend money in store the chance to start spending money that they don’t have. Doing this means that people who sometimes can’t afford the repayments get the chance to buy, and in the end face financial difficulty over the high interested incured at the end of the loan.

Harvey Norman and David Jones see it as ‘They buy now, they pay more later’ as opposed to the marketing slogan ‘buy now, pay later’.

Whats the catch?

I could talk about this for a long time, but instead I will make a list of dot points that show WHY you should be very careful when getting a store credit card;

• Monthly account fee.
• Interest free for period, but come end of period, interest rates go to 19% p.a.
• Making early payments incur a penalty.
• You can only pay the card out in cash, no debt transfers to other credit cards.
• Interest free throughout your loan period - but at end of loan the interest is back dated and applied immediately.

My experience with Store Cards

I have $1200 owing on a Harvey Norman card from buying a TV at Christmas, silly I know - but i wanted to treat myself. This I am going to pay off in full next month to get rid of it, I am sick of thinking about it.

I am also a share holder of David Jones - meaning I get the DJ’s discount via the store card they have. This means if I buy a product from DJ’s - I can put it on store card - clear it at the end of the month and save myself 5% on the total cost of my purchases.

What are your experiences with store cards?

I want to hear from everyone their own experiences with store cards. Were they good, bad or indifferent? I hear so many nightmare stories about these cards that I can’t believe anyone comes out of them safe and sound without owing lots of money.