Store Cards

Numerous stores, such as departmental stores chain stores, auto supply stores, gasoline companies and others, have their individual credit cards. These credit cards serve three different purposes for these stores.

  • First and foremost, credit cards are known to promote sales. Conventionally, earnings of all stores, irrespective of their nature, are completely dependent on the sale of their merchandise. Several researches have established that usually people make more purchases from the stores that have their own credit cards. In fact, the store-issued credit cards are basically aimed at encouraging people to buy more on credit from specific stores issuing such plastic money.
  • Secondly, by having their own credit cards, the stores actually enhance their respective earnings. In fact, they are funding the purchases of their customers at very high interest fees on the credits. Hence, it is not surprising to note that there are many stores whose earnings from their credit card operations or more precisely the interests earned from the credits given to the customers far overweigh their sales proceeds.
  • In addition, the stores have now begun to analyze the valuable data they collect from the usage of their credit cards by the customers. Now they are able to identify the market trends and the people's preferences by examining what customers are buying from them. This, in turn, helps the stores to enhance their business.

Benefits of store cards

If you examine the pros and cons of the store cards, you will surely find that they are not as bad as one may make them out to be. Apart from the exceptionally steep rate of interest, store cards definitely have their advantages too. A few of the benefits of possessing a store card are discussed in brief below.

Bank cards are among the credit cards that can be easily obtained. One may also get credit cards of the reputed stores without much difficulty. in actual fact, compared to the less prestige store cards, credit cards of the fashionable stores are much easier to obtain.

On the other hand, credit cards issued by the gasoline companies can be obtained most easily. This is because the different gas companies want more and more people to purchase at their stations. They are of the view that when an individual has their company credit card, he or she will surely halt at their gas station to make purchases. It may be mentioned here that while the traditional oil company cards do not charge any annual fee, their interest rates are exorbitantly high - something around 18 per cent per annum, and, at the same time, their maximum credit value too is as low as $300 to $500. These old-fashioned oil cards can be used only at specific stations selling gas of a particular company and are now being gradually withdrawn from the market by the gasoline companies. The traditional oil cards are now being replaced by new and more versatile credit cards that may be used at the gas stations, to book flight tickets, pay for your food as well as book hotel rooms. In fact, like the store owners, the gas companies too have realized that they can make a lot of money from the charge-it or credit purchase industry. Hence, the oil cards are gradually turning out to be more like the bank cards as they can now be used at various places. It is interesting to note that several gas companies have also established their own banks simply with a view to offer the customers an arrangement of bank cards and oil cards.

Similarly, the store owners are now aware that if an individual has their credit card, chances are more that they will make purchases from their stores. At the same time, the customers using the store cards are also likely to make more purchases with the credit cards than what they would have done if they were required to make payments in cash. As a result, the stores are issuing more and more cards these days and anyone, who the merchants think can foot the bills, can access these cards easily.

People possessing store cards enjoy an additional bargaining advantage in solving any problem with the merchants. This is primarily owing to the fact that the store owners would never want to annoy their favorite customers over trifle issues. The merchants firmly believe that the best customers always possess and use their store's credit cards.

Another advantage of having a store card is that the store owners occasionally mail their best customers special catalogs and advance information regarding sales. In addition, customers possessing the store cards or the dual store/ bank cards are increasingly able to take advantage to the special 'frequent charger' schemes that offer additional rebates, free commodities and special bonuses on credit purchases done using the store cards.

Last, but not the least, to some extent, the store cards offer the customers more protection against stop-payment than what is provided by the bank cards and the travel and entertainment (T&E) cards.

Shortcomings of store cards

One of the biggest shortcomings of the store cards is that they are inclined to charge higher interest rates on credit purchases in comparison to most other credit cards. However, things were much different some time ago. While the majority of the stores did not charge any interest on the credit purchases made by the customers using their cards, some of the bigger or costlier stores even did not send any invoice to the customers till a few months after the purchases were made. Now, things have changed and, so to say, become more systematic as bills are dispatched to the customers regularly each month. Generally, the stores now offer a 20 to 30 days' grace period before sending the bills and no interest is charged from the customers during this period. However, if the customer fails to clear the bills during this period, the credit card company levies very high interest rates on the purchases made on credit using the store cards. Unfortunately, there are many stores that do not offer any free or grace period to their customers and charge interest from the very day the purchases have been made.

There was a time when even if a customer ignored a payment or did not reimburse a bill on a store card, the store seldom reported it to the credit organization as the customer being a 'slow pay' or 'no pay. In case, even if the store reported the issue to the organization issuing the store card, it was only after a very long grace period. In fact, most stores consider the store cards to be a service to their customers and not a profit making mechanism. Thus, they never made any attempt to anger their genuine customers by reporting against them to the credit organizations. It is really regrettable that as the store cards or credit cards became easily available to the masses, the stores changed their ways and today the store card is nothing else, but a profit center.

These days, if a customer does not clear his or her dues in full every month, they may land up paying a much higher rate of interest on the credit purchases than what they would have to pay if they were using a bank card or a travel and entertainment (T&E) card for making the purchases. Therefore, it is essential to remember that the store cards are not necessarily the most inexpensive alternative to finance your purchases.

Moreover, when you possess a store card, you can seldom overcome the additional appeal to spend on all the things that these cards make it so easy to resign to. However, such temptations are usually restrained as compared to the bank cards, the store cards can be used only in a few places. However, similar to the bank cards that can be used almost everywhere to purchase anything; the recently introduced dual store cards have limitless enticements. In fact, majority of the merchants have discovered that the mean sale in their stores have gone up considerably with the introduction of the new dual store cards. Another disadvantage of the present day store cards is that people using store cards these days have very little privacy as the stores are able to collect all information regarding the customer through data mining. For instance, if a customer buys maternity clothes from a store using a store card now, it is possible that nine months later the store will send him or her mail recommending the purchase of baby clothes. Contrarily, if one uses a Visa or MasterCard to make the same purchases from the same store, it would not be possible for the store to send a similar mail as the purchases would not correspond with the address of the customer. This is owing to the fact that when anyone makes credit purchases using a Visa or MasterCard, the merchants are supposedly unable to secure the address or the telephone number of the customer. Instead, they only have record of the account number and the name printed on the credit card.

However, the issue does not end here as companies engaged in aggressive marketing will go to any length to obtain the customer's address and phone number even if they are using a Visa or MasterCard to make their purchases from different stores. In such cases, the companies will prepare a list of the card account numbers and the names of the card holders and then tally or reverse-append them with the addresses and names listed elsewhere, such as voter registration records, other credit card applications, driver's license data, yellow pages and so on. And in the absence of any emergency laws, it is very much possible that the some of the merchants may even sell this kind of cataloged information over the Internet with a view to make some additional profits.

It is concerning to note that this kind of privacy encroachment by the merchants is growing rapidly and it appears that some amazing exploits of following the customer's personal information from their credit purchases using store cards are very much round the corner. This may be effective and useful for an enterprising marketing merchant, but perhaps not good at all if the consumer is too sensitive about his or her privacy and who has already been receiving lots of rubbish phone calls and even loads of junk mails.

The dual store/bank card

These days, cards issued by the different stores are no longer as mellow and moderate as they used to be some time ago. This is primarily owing to the fact that the credit cards that were precisely distributed by the traders are now being substituted by cards carrying the names of the stores. However, this does not mean that the store whose name is displayed on the credit card is issuing them individually. On the contrary, they are now being issued by some bank. This is a fall-out of the changes brought in the federal banking laws that states that any store issuing its individual credit card directly is liable of coming under the stringent state consumer protection legislations that control issues like interest rate and late fees. However, banks based in a different state issuing cards that resemble exactly like the earlier store cards, including the brand name of the store, can afford to overlook these annoying state regulations. This arrangement is beneficial for the stores, but not in the consumers' favor. While it helps the stores to enhance the scope of their profits, for the consumer the new practice means higher interest rates and late fees.

This new practice in store cards is known as 'dualing', deriving the name from the fact that a dual card has double operations. In such type of store cards, the name of the store, for instance Bloomingdale, is printed in large letters at the top, while the words 'Premier Visa' are in smaller lettering. The dualing card also carries a Visa insignia. When a consumer uses the card to make purchases at Bloomingdale, the store will send him or her invoice in the following month. Moreover, as the card enables the store to follow the data related to the purchasing activities of the consumer, it is most likely that it will send a mail to the customer a recommending the purchase of pillows, if he or she has previously bought a bed and two sets of attractive flannel bed sheets with zebra stripes all over. Such bed sheets are a favorite of the customers at Bloomingdale. On the other hand, if a consumer uses the same dualing card for purchasing tickets to New York at the South-West Airlines ticket counter, Bloomingdale is unable to track any information regarding the ticket and hence the bill will be mailed to the consumer in a different envelope from the FDS National Bank, situated in Mason in Ohio. Hence, this goes on to establish that a dualing card is a store card as well as a bank card having different functions.

It needs to be mentioned here that when an individual makes use of a dual store/ bank card, he or she is no longer sheltered by their state's consumer protection regulations vis-à-vis issues such as fees charged beyond the limits and charges for bounced cheques. In fact, the dual card offers a credit limit that is comparatively much more than the store card. This may actually prove to be detrimental for the consumer's capability in obtaining other loans such as a home mortgage as his credit report would display very high probable borrowings. Frankly speaking, the dualing cards are not actually as bad as they may seem to be, but the buzz word is that when an individual is getting one of them, he or she should first ensure that they are well aware of what they are accessing and then accept the offer. Always remember that no one is under any kind of compulsion to take the offer, irrespective of the fashion it is being made. Actually, it is essential for the banks issuing the dualing cards to secure the customer's consent, but they seldom tell the customer of this basic fact. If any one wants to, he or she may simply retain their non-dual card and not accept the offer for the dualing card.

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