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21 Sep 2012

WHY I KEEP STORE CARDS

Yes you read correctly, I do. I keep store cards for Edgars and Truworths to be precise. The most patient stores I know. Hubby had a Woolworths card that, like the two we kept, was hardly ever used. Because we hardly ever used the Woolworths card, it was cancelled. I'm so shocked that we still have the two cards. I assumed its the norm to cancel cards when a consumer has not reported to the till for a year or more. Truworths doesn't.

Anyway, you may be wondering why, after trashing debt, and talking about all that paying yourself first yada-yada, do I still carry store cards. No its not hypocrisy. This is the summarized version of my answer:

To Postpone Parting with Money a.k.a. Time Value of Money
Most people assume that I enjoy parting with my hard earned cash, since I do stuff like fast tracking my mortgage payment and preferring to pay cash for my wheels. It's not true. I love holding on to my cash for as long as its possibly making financial sense. I keep my money only when I am not paying any interest on whatever amount I owe. I love the idea of paying smaller installments over 6 months for an item. Like with my son's video camera which was for sale at R2000+ from CNA. I paid it over 4 months. This means that I have a manageable budget without high peaks of expenditure. Whilst I can afford the full amount, I'd rather put the first R1500 I have towards my homeloan than on my interest free Edgars account. I make sure I pay ZERO interest, so I see no point in paying upfront for my purchases when I don't have to.

To me, my store cards, which are really under-used, offer free money. I ALWAYS use the 6 months interest free option. I buy my kids clothes twice a year. At the end of summer, I buy summer clothes for the following year in the end of season sale. That way I get up to 50% off. It doesn't bother me that they use the clothes only close to a year later. I even bought my daughter a classic coat for a 10 year old… she is seven. The coat was about 70% off and looks amazing. When I buy my kids clothes, I pay it up a few months before I buy the next season clothes. I usually pay R200 or less for kid’s clothes monthly due to that. A reminder… I pay exactly the amount I spent, interest free.

No Cash Policy
I don't have a credit card and I hate withdrawing cash. So I swipe my store cards every time. I also use my debit card though. Don't get me wrong, I have nothing against credit cards. I even like it when people use credit cards properly to get even wealthier. But a credit card never worked for me. I end up paying the annual fees for no reason at all.

Gifting
I love buying gifts, and I almost always use my store cards to buy them. That way, if I budget to use the money I will earn in the future to buy a gift that is on sale at that moment, I use my card and pay minimum 6 months installment until I get the money I expected to pay it off. Last Tuesday my brother was graduating and I took him to both Edgars and Truworths men for some work gear. It was not a cheap purchase, but I know that I will be paying it over 6 months, without interest. It makes me feel like I saved for the purchase upfront.

Rewards
I am a sucker for the reward system and all those points. This could be a reason why I keep store cards like Edgars. They have some and I am happy to earn the points. To be honest, I don't even know how to redeem them, but I know they will come in handy when time comes for me to use them. A friend of mine is so good with her ebucks. She bought her dishwasher and plasma screen TV with ebucks. I really have to learn to do that. The best I manage to redeem is R120 or so from Clicks. I have lots of Nedbank Greenbacks. I just don't know what to get with them. I think I will have the unit trusts. I dont like the charity option. I prefer to give money to charity by myself. Then there is the Mr's ebucks which I think are far easier to redeem and use.

Those are some of the reasons why I keep store cards. Off course, I don't want any debt and I refuse to get any more store cards. If you are a shopaholic, stay away from any kind of credit card. I can resist a “you may now buy for R12,000” that I see in my till slip. That statement means nothing to me other than serving as my "Joke of the day".
Do you also keep store cards? I would love to hear why.
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2 comments:

  1. I feel the same about high peaks of expenditure and will rather pay a smaller amount monthly than spend a huge amount at once (especially on clothing). Its winter time again and I need to buy clothes for my two children. I have never had a "clothing account" except for the school clothing accounts and was wondering if other clothing accounts also offer an interest free period such as Birches. This is how I came across your post. So you suggest Truworths? Do they offer an interest free period? Thanks
    Tracy (South Africa - Port Elizabeth)

    ReplyDelete
  2. Truworths does Tracy. 6 months interest free. It's free money if one is disciplined.

    ReplyDelete