What is a Store Credit Card or Store Card? A Simple Explanation for Kids and Teens

What is a Store Credit Card or Store Card? Borrowing 101: Easy Peasy Finance for Kids and Beginners

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Introduction to Store Credit Cards for Kids and Teens

This video explains the concept of store credit cards in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about store cards, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

Suitable for students from grade levels:

• Kindergarten
• Elementary School
• Middle School
• High School

The topics covered are:

• What is a store card
• What are the advantages of store credit cards
• What are the disadvantages of store cards
• Should you have a store credit card

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What is a store card?

A store card is a type of credit card that is offered by a store and can only be used to make purchases at that specific store or store family.

Often, store credit cards come with some special bonus – like additional discounts, extra points, or other benefits.

For example, Target store card gives a 5% discount and free shipping, and Gap card provides additional points for purchases across Gap family stores – like Gap, Banana Republic, Old Navy, and Atheleta.

What are the advantages of store credit cards?

The main advantage of store credit cards is that they are easy to get even if you don’t have a high credit score – most of them get instantly approved when you are checking out by providing very basic details to the cashier.

Since they are so easy to get, they might seem like an appealing option for someone who has a low credit score and is having a hard time getting a regular credit card. In such cases, the store cards can help build credit score.

Store cards also give exclusive offers to cardholders like special promotions, extra discounts etc. which can benefit people who shop at that store regularly.

What are the disadvantages of store cards?

The most obvious drawback is that they can only be used in specific stores, which means their rewards are also limited to those stores.

But, the main disadvantage of store credit cards is their exorbitant interest rate, which can be upwards of 25% – much higher than regular credit cards.

Store cards also have a lower credit limit resulting in higher utilization.

And many of their other advantages can quickly turn into disadvantages if you are not disciplined.

For example, being easy to qualify for means that people who cannot afford the purchases will also be tempted to get the credit card only to find themselves buried in a mountain of debt.

And building your credit score requires responsible use: if you overspend, make late payments, or don’t pay your balance in full, you can completely wreck your credit score for years to come.

The benefits you get from using a store card can quickly be overshadowed by these pitfalls if you are not disciplined. 

Should I have a store credit card?

If you shop at a store frequently and can be responsible with your card, then getting a store credit card can be beneficial.

However, if you have a tendency to overspend or get into debt, you should definitely avoid store cards.

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Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens

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Podcast: What is a Store Credit Card or Store Card