Store credit can achieve many things. Besides being a payment option, it can attract new customers and inspire loyalty among your present ones. Besides, with a store credit, you will increase spending and even grow the store’s revenue provided you manage it deliberately and innovatively. This is the reason most successful retailers have incorporated store credit in a way or the other.
Nowadays, stores offer credits in different forms. In our post, we will discuss all you need to know about store credits as well as how you can use them to increase the success of your brand.
What is a customer store credit?
Store owners can offer credit to their customers for any purchase they make. The store credit system enables a customer to check his current balance and the balance of their gift cards. This credit belongs to a particular customer and doesn’t expire like promotions and other sales. Also, the credit belongs to only one store, and it is impossible to transfer it to other online retailers as they use different credit systems in crediting their customers. As a customer, you can also use your gift card balance to get your store credit.
Types of store credits
- 1. Store credit cards and financings
This type of store credit is issued when a retailer allows a customer to pay later for products.
- 2. Returns and Exchanges
When a customer wants to return or exchange an item, then the store gives her a store credit as an alternative to a full refund or on top of it.
- 3. Gift Cards
When you buy a gift card for someone, then it means purchasing a credit store for someone else. Gift cards hold store credit from different rewards and loyalties.
- 4. Loyalty reward
A customer can get store credit if they intend to purchase a product at a later date.
Five Best Ways of Managing the Store Credits
1. Do your homework before signing up for a store credit card or account
The best way of managing your store credits is by researching your store credit. Check your credit limit and the repayment terms and period. When on vacation, you will always be tempted to spend extravagantly and especially on credit. But before using your store credit, ask yourself whether you will pay it before the end of the credit period. This is because if you fail to pay in time, then interest on each item until you find the cost of each too expensive.
Though everyone loves credit, it’s wise to think of the lower credit card score; you will get if you fail to pay your dimes before the end of the month.
2. Try to pay off your balance before interest kicks in
If you have some pending bills in your credit card, then it’s essential to pay them before their due date. If you delay the payments, then you could incur interests and other fees that will end up hurting your pocket more. Besides, you will hurt the credit score, and since lenders use the score to assess your limit, you will find yourself getting small loans or even rejections in loan applications.
3. Use them as a short term loan alternative
Well, you should also follow a good rule when applying for store credits: Don’t apply many. Applying too many could signal that you are in a financial crisis. Therefore, avoid bidding for credits you need. Besides, applying for too many credits at a time will reduce your credit score.
4. Never get close to your credit limit
Another good rule of thumb with store credits is never to approach your limit. Most stores offer small credit limits, and it’s possible to approach the limit on one shopping. But I’ll advise you against using more than 70% of your credit limit as it can lower your credit limit.
5. Plan ahead and never miss payments
Finally, if you have an emergency or anything else that will hinder you from completing your store credits payments in time, then I’d suggest contacting the crediting store explaining to them in detail. They may have mechanisms in place to keep your credit score intact during such moments.
Credits can be your financial savior and downfalls too. It all goes down to how you plan to use them. If you misuse them, then you will find yourself sinking into debt, but if you follow our guide, then managing an using your credit wisely will be easier.