DON’T BE lured BY CARD PROMOTIONS
Store accounts can be useful, but be disciplined writes Angelique Ruzicka
Admin fees, high interest rates and pushy call centre agents who are keen to sell you other products are just some of the few negative things you are in for when you get a store account. I’m not saying store cards are evil, but the devil is definitely in the detail. With the festive season not far off, promoters are lurking at the entrances of stores, hoping to entice shoppers to open an account and spend heavily, and they have many persuasive techniques up their sleeves to win you over.
It would be unrealistic to simply recommend avoiding store cards altogether, although this is highly recommended. Instead, we’re going to highlight some savvy ways to deal with store credit offered by retailers such as Edgars, Foschini and Woolworths.
While store accounts come with trappings and temptations, there are things you can do to avoid paying more and getting into further debt, while taking advantage of the process.
THE INTEREST-FREE PERIOD
When you open a store card, you generally get to buy something and not pay interest on it for six months. However, once the interest kicks in, it can be hefty.
HANDY TIP: Be disciplined and pay your store card off before the interest-free period ends. If you do this, you will have bought your clothes using credit, but won’t be paying anything extra.
VOUCHERS AND DISCOUNTS OFF YOUR NEXT SHOP
Another way stores snare customers to open an account is by offering you money off your purchases. Edgars, for example, is running a promotion in which you get R600 off your first purchase if you open an account.
There are often terms and conditions attached to such deals. In Edgars’ case, the discount voucher cannot be used to pay off your Edgars account, nor can it be exchanged for cash, and it can’t be used in conjunction with any other sale or promotion.
Some stores insist that you split up the vouchers. While they say you have R600 off, what they in fact mean is that you have to use the vouchers in R100 increments, forcing you to spend more money more often.
HANDY TIP: Carefully read the terms and conditions. Only use the vouchers if you intend to do some shopping anyway. Once you’ve used your voucher, the key is to pay your account off so that you benefit from the discount without being forced to pay interest on any credit.
THE EARN POINTS WHILE YOU SHOP TRAP
Some store card providers have reward schemes in which you earn points on your purchases.
HANDY TIP: It can help to accumulate these points so that you get discounts off your purchases, and take advantage of other rewards and discounts that are on offer through partner companies. But don’t shop just so that you get more points. Reward schemes are gimmicks and stores use them to collect more information about their customers’ spending habits and likes so that they can sell them even more stuff. The cost of the reward scheme may already be built into your membership.
THE PUSHY CALL CENTRE AGENT
Once the offers and discounts have expired, you may find there’s no need to keep your store account open. And good on you if you think this way – after all, they’re a temptation and they are one of the most expensive forms of credit to have. However, call centre agents can be pushy and a nightmare to deal with. They may try to persuade you keep the account open and “just not use it”. Or you may be transferred from one agent to another under the pretence of trying to find the right person to deal with your cancellation.
HANDY TIP: Be firm with your wish to cancel your account. Stay on the phone and call back if they hang up on you. Don’t get dissuaded as you get transferred from one person to another. If you don’t get any joy, complain on social media or go up the managerial chain until you are heard and you get what you want.
Remember, it’s in their interest to keep the account alive as they are still collecting admin fees, even if the account is on a zero balance.
It’s simple to open a store account – all you need is proof of where you live and your ID, and you’re set. A store card can be a useful facility if you know how to use it properly and you take advantage of the sales and freebies that come with it. However, the key is not to get dragged into debt and abuse it. If you find you’re not disciplined about it, rather pay off the card, cancel it and cut it up.
HOW TO BE SAVVY WITH YOUR STORE CARD
Don’t spend the maximum allowed on an account. If a store says you can spend up to R10 000 on your card, don’t be tempted to use all of this allowance – you’ll only drive yourself further into debt.
Make sure you’re on the interest-free plan. Typically, on a six-month plan, you don’t pay any interest. However, with The Foschini Group’s 12+ month payment plan option, you will be charged interest on any overdue balance.
Make sure you pay off your card in full every month. If you think you may forget to pay, set up a debit order so that you cover the instalments. If you miss a payment or pay late, you could end up paying penalties.