Store cards and retailer credit cards

A store card is a borrowing card you can normally only use in the shop that gave it to you, or in that retailer's partner stores. It works like a credit card in that you buy goods on credit and pay the money back later, but the interest charged can be higher than on bank loans or credit cards, and official guidance for Northern Ireland warns that unless you plan on paying off the full balance straight away, store cards can often work out to be twice as expensive as credit cards¹.

A retailer credit card is a different product that often gets confused with a store card. It carries the name of a shop or supermarket, such as Tesco, but it is a full credit card tied to a card scheme like Mastercard or Visa, so it can be used anywhere that accepts cards, not just in the named store¹. Many retailer cards add loyalty points or discounts on the retailer's own goods as the incentive to apply.

Both types are regulated credit agreements, so you have legal protections: a minimum repayment rule, protection against unfair charges, and Section 75 of the Consumer Credit Act, which can make the card provider jointly liable with the retailer when something goes wrong with a purchase between £100 and £30,000⁴.

What a store card is and how it differs from a credit card

A store card is a card you can use to pay for goods over a period of time. Citizens Advice describes it as working in the same way as a credit card, but often charging higher rates of interest and being usable only in the chain of shops that issued it¹. Official guidance for Northern Ireland makes the same point and adds the cost warning: unless you pay the balance off in full straight away, a store card can often work out to be twice as expensive as a credit card².

The legal framework treats store cards as credit tokens. Under the Consumer Credit Act 1974, a credit-token is defined as:

In practice, that means the card issuer, usually a finance company working with the retailer rather than the shop itself, is lending you the money and is the firm you owe. The retailer typically sweetens the application with a first-use incentive: official guidance notes that store cards usually offer a discount or a gift the first time you use one, to persuade you to apply². Many also offer ongoing discounts on goods in the shop¹.

The things that make a store card different from an ordinary credit card are its scope and its price. A credit card can be used to buy goods anywhere, including over the phone, online or by post¹. A store card cannot. And because the interest charged can be higher than on bank loans or credit cards, Citizens Advice advises always checking which is cheaper overall before relying on one¹. If you are weighing the two, the comparison page on store cards vs credit cards sets them out side by side.

Retailer credit cards: store rewards on a card you can use anywhere

A retailer credit card looks like a store card from the outside, because it carries a shop's brand, but it behaves like any other credit card. Citizens Advice is explicit about the distinction:

Credit cards in the UK are issued by banks, finance companies and larger supermarket and store chains¹. Each issuer is a member of a card scheme, such as Mastercard or Visa, to which the card is tied⁵, and that scheme membership is what lets you spend anywhere the scheme is accepted, in shops, online, by phone or by post¹. The Payment Systems Regulator describes a payment card simply as a card that can be used to withdraw money or pay for goods and services³.

The reward is the reason many people take one out. Tesco Bank's Clubcard credit cards earn one point for every £8 spent outside Tesco, compared with no points on spending outside Tesco with a Clubcard loyalty card alone; at Tesco and on Tesco fuel the card earns on top of what a standalone Clubcard earns¹⁰. Which? notes that the Tesco Low APR Credit Card earns 1 Clubcard point per £4 at Tesco and on Tesco fuel (excluding Esso), plus one point for every 2 litres bought, and that Clubcard points can be converted at a rate of two Virgin Points per point¹¹. Tesco Bank states that when you open a credit card account with it you will be automatically enrolled into the Clubcard scheme if you are not already a member¹⁰.

Rewards are only worth having if the card is cheap for the way you use it. If you carry a balance from month to month, the interest will usually outweigh the points. The wider guide to rewards and cashback credit cards explains how to judge that trade-off, and the guide to types of credit card shows where retailer cards sit among the alternatives.

Interest and minimum payments on store and retailer cards

Both store cards and retailer credit cards work as monthly accounts: interest is charged if the amount is not paid off in full at the end of the month¹. If you do pay off the total amount by the due date, you will not be charged interest¹. MoneyHelper puts the same rule plainly: provided you pay the bill in full and on time each month, you will not be charged interest¹².

The trap is what happens when you pay less than the full amount. Official guidance warns that if you do not pay off the full amount every month on a credit card, you will be charged interest on the whole lot, not just the unpaid amount². Citizens Advice Scotland confirms the same rule for the whole of the UK¹³.

If you do not clear the balance, you will be asked to repay a minimum amount each month. Citizens Advice describes this as typically around 3% of the balance due or £5, whichever is higher¹⁴. For regulated credit agreements for credit cards or store cards made on or after 1 April 2011, the FCA's rulebook requires the firm to set the minimum required repayment at least at the amount which repays the interest, fees and charges applied to the account, plus one percentage of the amount outstanding¹⁵. That rule exists so a minimum payment always reduces the debt a little, rather than just servicing the interest.

Paying only the minimum is slow and expensive. The rules on persistent debt exist for exactly this situation, and they apply to store cards as well as credit cards: National Debtline notes that the rules only applied to credit cards at first, but now apply to store cards and catalogues too, in both England and Wales¹⁶ and in Scotland¹⁷. If you have been paying more in interest, fees and charges than you have been repaying of the balance over a sustained period, the firm must contact you and, if nothing changes, can eventually suspend your use of the card. The page on the persistent debt rules explains the process, and how credit card interest is charged explains the sums behind it.

Store card and retailer card closures: what happens to your account

Retailers and their banking partners sometimes close card programmes, and when that happens the important thing is that closing the account does not close the debt. You keep making repayments until the balance is cleared, even though the card can no longer be used.

If your account is suspended or closed, the practical effects are set out by National Debtline:

The same applies in Scotland¹⁷. Suspension can happen for several reasons: persistent debt, missed payments, or a decision by the issuer to withdraw the product. Whatever the trigger, the balance remains a regulated credit agreement and the firm, or whoever it transfers your account to, must follow the rules on arrears and forbearance.

If the account is sold or transferred to another company, your rights move with it. The page on when your credit card or loan moves to another company explains what changes and what does not, and cancelling or closing a credit card covers doing it yourself. If a closure leaves you unable to manage the repayments, free debt help is available: the debt help guide lists the free charities and services, including options specific to Scotland and Northern Ireland.

Fees and charges on retailer credit cards

The charges to check in your credit agreement are the ones Citizens Advice lists: you will usually be charged for going over your credit limit, for using the card abroad and for late payments¹⁴. Late payment charges have a fairness ceiling: Citizens Advice Scotland notes that charges of more than £12 for missing a credit card repayment may be seen as unfair¹³, and the page on late payment and over-limit charges explains what you can do about one.

Some payments carry charges of their own. HMRC charges a non-refundable fee if you pay a tax bill by corporate credit card or corporate debit card, though not if you pay by personal debit card¹⁸. The regulations that once allowed surcharges on personal credit card payments have been revoked¹⁹, which is why shops cannot charge you extra simply for paying by credit card; the surcharge ban page explains that rule.

Behind the scenes, card use carries costs that retailers pay, and these feed into prices and rewards. When you use your card to pay for goods or services in a shop or online, your bank will charge a fee to the merchant's or retailer's bank, except for American Express cards²⁰. The Payment Systems Regulator has found that Mastercard and Visa increased their core scheme and processing fees to acquirers by at least 25% since 2017²¹, and it is examining card fees to ensure businesses and consumers are getting a good deal on card payments²². Which? reported that in 2021 this translated into an additional £141 million in costs imposed by card firms onto retailers just to process debit card transactions, with debit card scheme fees rising 28% compared with 2020²³. These are costs to retailers, not a charge on your statement, but they are part of the economics of card rewards.

For most people the charges that actually bite are the everyday ones: the fees and charges page collects them in one place.

Using a retailer credit card abroad and withdrawing cash

A retailer credit card works abroad wherever the card scheme is accepted, but spending in a foreign currency usually costs extra. Most credit cards add a foreign transaction fee of around 3% on non-sterling purchases and cash withdrawals²⁴. For comparison, MoneyHelper notes that debit cards typically add a foreign exchange fee often around 3% of the transaction amount, plus a spending or cash machine charge typically between £1 and £3 each time you use the card abroad, except for euro transactions in the EU²⁵. Retailer cards vary: Which? reported that PayPal's UK credit card charges a 2.5% fee when used abroad²⁶.

Cash withdrawals are treated differently from purchases wherever you make them. Withdrawing cash on a credit card counts as a cash transaction, which typically attracts interest from the day of the withdrawal and a cash fee, and the same treatment applies to other transactions the issuer classes as cash, such as gambling stakes and sometimes buying currency. The page on withdrawing cash on a credit card explains the costs, and the credit card gambling ban explains why gambling transactions are treated specially.

Before travelling, it is worth checking your card's terms for the foreign transaction fee and the cash withdrawal fee, and deciding whether a different card would be cheaper for the trip. The guide to using a credit card abroad covers the whole picture, including whether to pay in pounds or local currency at the till.

Balance transfers and money transfers: up to 95% of your limit

Some retailer credit cards let you move debt onto them. A balance transfer moves an existing credit card balance to the new card, usually to pay less interest; a money transfer moves money from the card into your bank account, which you can then use to clear an overdraft or other debt. The page on balance transfer vs money transfer explains the difference in detail.

There are two limits to know about. The first is how much of your credit limit you can transfer. Tesco Bank states that you can transfer up to 95% of your available credit limit, for both balance transfers and money transfers⁸. The second is the fee: Which? notes that some cards do not charge a balance transfer fee, but others charge up to 5% for each balance transfer²⁷. The balance transfer fees and money transfer fees pages show how these are worked out.

One restriction catches people out: you cannot usually transfer between two cards from the same issuer. Tesco Bank states plainly:

So if you already hold a card from the retailer's bank, a second card from the same bank will not let you shuffle the balance across. Which? gives a worked example of how the limit interacts with the transfer: if you held an 18-month 0% money transfer card with a limit of £2,000, you could request a £1,000 money transfer to your bank account²⁴. The guides to balance transfer credit cards and money transfer credit cards cover the mechanics, and closing old accounts after transferring covers what to do with the card you leave behind.

Who can get one: age and how applying works

The basic eligibility rule is simple: you must be 18 before you can apply for a credit card or store card⁶. Beyond age, the issuer runs a credit check and decides both whether to lend to you and how large a credit limit to set. The page on applying for a credit card explains what is checked and what to have ready, and credit card limits explains how limits are set, raised and lowered.

Applying for either type of card involves a credit agreement, which sets out the interest rate, the minimum repayment and the charges. Read it before you sign, because the introductory rate is time-limited: Citizens Advice describes introductory interest rates as offers where you start off paying a low rate of interest or none at all, and the rate then increases after a certain amount of time¹⁴. The page on when a 0% offer ends explains what happens next.

Once an application is accepted, the card arrives by post. Tesco Bank states that the card is sent within 5 to 7 working days of the application being accepted, along with the terms and conditions⁸, and its product pages give the same timescale of 5 to 7 days after acceptance¹⁰. Spending is not possible until the card arrives and is activated. If a card fails to arrive, the issuer can be contacted, because a card sent but intercepted is a fraud risk; the guide to credit card fraud and unauthorised payments covers what to do.

Missed payments: fees, credit file markers and blocked spending

Missed payments escalate in a predictable pattern, and the earlier you act, the less damage is done. StepChange describes the stages: after one or two missed payments you will get reminders, and interest and charges including late payment charges will be added, but if you catch up, no further action should be taken and the missed payments may not be recorded on your credit file²⁸. From three or four missed payments, the missed payments will be recorded on your credit file, and the creditor will soon think about sending a default notice for credit card or buy now pay later debts²⁸.

The consequences are concrete. Tesco Bank tells its credit card customers that a missed payment brings a letter, email or SMS notification, that a missed payment marker may be noted on your credit file, which could impact your ability to borrow money, and that spending may be blocked until payments are up to date⁸. Markers last: all missed, late or partial payments are recorded on your credit file for at least six years⁹. The Financial Ombudsman has published a case study in which a borrower discovered two missed payments marked on his credit file after a repayment holiday, showing how markers can appear even where the borrower believed arrangements were in place²⁹. The guide to how credit cards affect your credit file explains the mechanics.

Late payment charges have a limit of their own: charges of more than £12 for missing a credit card repayment may be seen as unfair¹³. If you cannot afford the payments, free help exists and forbearance rules apply; see when you cannot afford to pay more and the debt help guide. Missing a payment on a promotional deal can also cost you the 0% offer itself, which the page on missing a payment on a 0% deal explains.

Section 75 protection and where it does not apply

Section 75 of the Consumer Credit Act 1974 is the strongest protection either type of card gives you. It makes the card provider jointly liable with the retailer for purchases between £100 and £30,000⁷, which means that if the goods are faulty, not delivered, or the trader vanishes, you can claim your money back from the card issuer as well as, or instead of, the retailer. Official consumer guidance describes the range the same way: if you paid for what turned out to be bogus goods or services by credit card, and the cost was more than £100 and less than £30,000, the card provider is equally liable³⁰. This protection is especially valuable on a store card, because the only shop you can use it in is the shop you may be claiming against.

The protection stops at the edges, and it is worth knowing exactly where:

• Debit cards, charge cards and prepaid cards are excluded. The FCA states that Section 75 does not include cases where the goods or services were bought with a debit card, charge card or prepaid card³¹, and Welsh trading standards guidance repeats that it does not apply to charge cards or debit cards³². A prepaid card, which only lets you spend what has been loaded onto it³³, gives no Section 75 cover at all.
• Agreements secured on land are excluded. Section 75A of the Consumer Credit Act states that the section does not apply to an agreement secured on land³⁴.
• Buy now pay later purchases are not covered. Shoppers will not be covered by Section 75 protection for BNPL purchases, as they would be when using a credit card⁷.
• A second cardholder may not be protected. The Financial Ombudsman has noted that when a second credit card has been issued to a person, such as a spouse, who is not the debtor, that person lacks Section 75 protection unless acting as agent for the debtor³⁵. The page on additional cardholders explains the detail.

Where Section 75 does not apply, chargeback may. Chargeback is a scheme rule rather than a legal right: it applies if you paid by debit card, or on a credit card for an item costing less than £100, and it is less than 120 days since the purchase³⁶. Welsh trading standards guidance confirms the same eligibility: debit card purchases, or credit card purchases where the price of the goods is less than £100²⁰. The comparison page on Section 75 or chargeback shows which to use, and the Section 75 exclusions page lists the gaps in full.

If a claim is refused and you believe it was handled wrongly, you can complain to the card firm and then, free of charge, to the Financial Ombudsman Service. The guide to complaining about a credit card provider sets out the steps in order.