Credit Card or store card

13 December 2007

At this time of year the temptation to apply for a store card to buy now and pay later is too much for some people. Some Store cards offer you a 62 day interest free period to gain your business.

This certainly sounds like a great deal. However, you "just" have to pay your account in full by the due date every month or you will find yourself being charged more than 20% interest.

Now, without doing any research, (ie: Just looking at the home page of Creditcards.com.au). I can see a credit card offering me 9.95% p.a. on purchases with 55 days interest free. Double the charge for 7 days, doesn't seem such a good deal anymore.

Credit Cards have advantages that store cards don't have. Apart from obviously being cheaper in terms on interest charges.

If you feel that your credit card balance is at a level that you no longer feel comfortable with it, you can apply to transfer your credit card to another bank, which will take on your existing debt, and charge you zero or a very low percent for a period, usually up to six months.

If you find your store card balance is at a level you don't feel comfortable with, you are going to need to take out a personal loan or apply for a credit card to wipe away your store card debt.

Don't be trapped into taking out a store card when offered one. Very high interest rate charges will be paid by more than 50% of store card holders.

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