Store Credit Cards: Do They Encourage Higher Consumer Spending? 

  • June 8, 2023

  • Eyes4Research

Store credit cards have become increasingly popular among consumers, offering various perks and benefits that are tied to specific retailers. A common perception is that having a store credit card may lead consumers to spend more compared to those who do not have a store credit card. 

Do consumers with store credit cards spend more? What are the factors at play and what is the relationship between store credit cards and consumer spending habits? Here are a few points to consider when exploring the relationship between consumer spending and store credit cards. 

Incentives and Rewards

Store credit cards often come with enticing incentives and rewards programs.  Cardholders may enjoy exclusive discounts, special promotions, and loyalty points that can be redeemed for future purchases. These perks can incentivize consumers to shop more frequently or spend more money to maximize the benefits offered by store credit cards. For some consumers, the allure of rewards can contribute to increased spending among cardholders. 

Impulse Buying and Instant Gratification

The temptation of impulse buying can be hard to resist when there is an offer to receive an immediate discount at the register when a customer applies for a store credit card. With instant credit available, consumers may be more inclined to splurge on items that they may not have otherwise purchased. The convenience and accessibility of credit at the point of sale can lead to higher spending, as consumers may feel less constrained by the financial limitations they would normally consider. 

Potential Psychological Effect

Having a store credit card can have a psychological effect on consumer behavior. Cardholders may experience a sense of exclusivity, belonging, or even a touch of entitlement– all of which can influence their spending habits. Just being in possession of a store credit card may create a perception of affiliation or loyalty to that brand, encouraging consumers to spend more to align with their identity as a cardholder. 

Consequences of Using Credit and Debt

While store credit cards offer benefits, they also come with higher interest rates when compared to traditional credit cards. Consumers who carry balances on their store credit cards may find themselves paying significant interest charges, potentially leading to debt. 

Some cardholders may be more disciplined and decide to use their store credit cards more strategically. They may take advantage of discounts and rewards without increasing their overall spending. 

While it is common to associate store credit cards with higher consumer spending, the relationship between store credit cards and spending is actually more nuanced. The rewards associated with store credit cards can influence consumer behavior, which could lead to higher spending levels. But other factors such as impulse buying tendencies, psychological effects, and individual discipline also play important roles in determining whether this audience will spend more than those without store credit cards. 

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