These credit cards are issued by the stores on their own. They have evolved from stores that traditionally gave goods on credit for their customers and made accounts for the same. As the products bought on credit started to increase, the stores created a single purpose credit card. This credit cannot supply at any other store. However, if a store has a chain or several other stores, you'll be able to use it within its other stores.
Many departmental stores and gas chains issue such charge cards which are honored only by them.
Examples: Examples of companies that offer a single purpose credit card are:
- Kohl's
- House Depot
- BP
- Shell
- JC Penney
- Macy's
- Space
- Old Navy
Rate of Interest
These credit cards act like all-purpose credit cards, except for the fact that single purpose charge cards are not honored or accepted at all stores. These charge cards offered by the stores make shopping easier and attractive, firstly, by giving goods on credit and secondly, through offering various discount schemes, for those who use the actual card. The interest rates charged on 'single purpose credit cards' are greater than those on 'general purpose credit cards' and that's in which the trick of earning profit lies.
Advantages To the Shop
There are many advantages of a single purpose charge card to the issuer. Let's look at them one through one.
1. Increased Sales: Consumers using single purpose credit cards don't have to pay for the purchase, each time they go buying. They only have to give their single purpose charge card and pay for the expenses made, which they can repay prior to the due date. These stores also offer many discount strategies, which attract consumers and increase the sales of the actual store.
2. Prevents Consumer Flight: Consumers are attracted towards the discount schemes offered by the store. Also they reach buy goods even without paying for it. So, customers when on the cash crunch will definitely come there. Consumers get accustomed to the buying pattern followed and become regular customers presently there.
3. Increased Profits: As the sale of goods raises, the revenue of the store also increases, which consequently increases the profits. Not only that, these stores also earn as interest payments from the defaulting parties. This feature wasn't present in the traditional system of giving goods upon credit.
4. Reduced Losses: As the store gets to find the goods that a consumer can buy on credit, it may easily reduce its losses even when goods are in love with credit. For example: A store is providing its customers having a single purpose credit card to be used only upon grocery items. Now the question is how much grocery is an individual going to anyway purchase for the whole month. There is a limit to the grocery products that an individual can buy and thus few people like going the store's money is stuck in credit. It will receive the majority of its repayment before the due date and if not really, it will receive an additional interest from the defaulting customer.
Advantages to the Consumer
1. Schemes and Discounts: Those utilizing a single purpose credit card, normally receive several discounts and schemes on goods bought inside a particular category, by the store. Consumers can make probably the most of it by spending less for the same quantity of goods or by receiving free goods.
2. In Occasions of Cash Crunch: If a consumer is out associated with money, he can use the assigned single purpose charge card to buy the required goods, without paying for it simultaneously. He can pay the amount later, when he offers sufficient funds, but before the due date.
As you can observe for yourself, a consumer benefits lesser as compared towards the store that issues the single purpose credit cards. Although, consumers can make the most out of it, when they can manage their funds efficiently and repay the credit amount prior to the due date.
These credit cards act like all-purpose credit cards, except for the fact that single purpose charge cards are not honored or accepted at all stores. These charge cards offered by the stores make shopping easier and attractive, firstly, by giving goods on credit and secondly, through offering various discount schemes, for those who use the actual card. The interest rates charged on 'single purpose credit cards' are greater than those on 'general purpose credit cards' and that's in which the trick of earning profit lies.
Advantages To the Shop
There are many advantages of a single purpose charge card to the issuer. Let's look at them one through one.
1. Increased Sales: Consumers using single purpose credit cards don't have to pay for the purchase, each time they go buying. They only have to give their single purpose charge card and pay for the expenses made, which they can repay prior to the due date. These stores also offer many discount strategies, which attract consumers and increase the sales of the actual store.
2. Prevents Consumer Flight: Consumers are attracted towards the discount schemes offered by the store. Also they reach buy goods even without paying for it. So, customers when on the cash crunch will definitely come there. Consumers get accustomed to the buying pattern followed and become regular customers presently there.
3. Increased Profits: As the sale of goods raises, the revenue of the store also increases, which consequently increases the profits. Not only that, these stores also earn as interest payments from the defaulting parties. This feature wasn't present in the traditional system of giving goods upon credit.
4. Reduced Losses: As the store gets to find the goods that a consumer can buy on credit, it may easily reduce its losses even when goods are in love with credit. For example: A store is providing its customers having a single purpose credit card to be used only upon grocery items. Now the question is how much grocery is an individual going to anyway purchase for the whole month. There is a limit to the grocery products that an individual can buy and thus few people like going the store's money is stuck in credit. It will receive the majority of its repayment before the due date and if not really, it will receive an additional interest from the defaulting customer.
Advantages to the Consumer
1. Schemes and Discounts: Those utilizing a single purpose credit card, normally receive several discounts and schemes on goods bought inside a particular category, by the store. Consumers can make probably the most of it by spending less for the same quantity of goods or by receiving free goods.
2. In Occasions of Cash Crunch: If a consumer is out associated with money, he can use the assigned single purpose charge card to buy the required goods, without paying for it simultaneously. He can pay the amount later, when he offers sufficient funds, but before the due date.
As you can observe for yourself, a consumer benefits lesser as compared towards the store that issues the single purpose credit cards. Although, consumers can make the most out of it, when they can manage their funds efficiently and repay the credit amount prior to the due date.