Return of goods is common in every business. Customers can refund the product they purchase if they are not satisfied with them. While returning goods, customers ask for a refund of money, and this will cause the exit of money from the business account. This can be a challenging situation for many organizations, and they try to find a different way to please the customers without refunding the money. Store credit is the best solution in this situation.
A Brief on Store Credit
Store credit is a strategy where retailers offer their customers rewards or value that they can redeem in future purchases. As per this policy, companies do not refund cash to the customers. Using a store credit strategy, customers can retain their money within the business while customers return their products.
Advantages of Store Credit Card
At present, many companies are implementing store credit to retain money in the business. Store credit has emerged as a common term in recent times. All need to understand the probable benefits of store credit. Companies offer valuable rewards to their customers.
No or less fees
Normally, customers do not need to pay extra charges to get a store credit card. These credit cards normally come with a welcome offer. Hence, customers can easily have these store credit cards without paying an extra charge.
Special discount offers by retailers
While customers opt for store credit cards, it helps them to get special discounts on several items. This is a strategy that helps companies in brand promotion. Store credit card is also a great way to save money and retain money within the business. Customers may also win double discounts and can purchase other items from the same store.
Store credit is essential for customers to get membership perks. Many companies offer store credit cards apart from normal in-store or online discounts. Once customers hold this membership, they can return the goods, including some advantages like free shipping or an installment plan.
You will win rewards
It has been noticed store credit will offer rewards to the customers. Many times, you will notice that once you spend the amount, you will get more rewards or discounts. This strategy is known as reward tier, and this strategy noticeably benefits customers.
Gain reward even with low credit score
Customers are eligible to obtain store credit cards with a minimum credit score. Customers need not maintain a credit score similar to a normal credit card.
Good for building credit
Customers can easily qualify for credit cards, and hence, these cards are good for rebuilding credit.
Probable Disadvantages of Store Credit Card
Store credit cards have loads of advantages; still, these cards also have some disadvantages.
Store credit cards come with a high-interest rate. If customers carry a balance, these cards will charge a high-interest rate. In some cases, interest rates can be more than 30%.
Deferred interest can be charged on store credit cards. Customers can use store credit cards to control expenses within the budget. Well, if you don’t pay off the balance within the interest-free time, you need to pay deferred interest.
The more you use these store credit cards, the lower will be your credit score. Hence, experts always suggest limiting the store credit card utilization so that you don’t need to pay extra interest or deferred interest.
What is a Gift Card?
Gift card or Gift voucher is also a way to attract customers during their purchase. A gift card is an alternative way to purchase goods instead of paying money. You can use gift cards during various purchases, like in the gas stations while purchasing branded products, etc. Gift cards can also be used in the restaurants. Gift cards can easily be both open-loop and closed-loop.
Normally, two types of gift cards are now available- Plastic or physical cards and digital cards. Digital cards are useful when you opt for any online store to buy any product.
Advantages of Gift Cards
Customers usually feel happy when companies offer gift cards. These gift cards are excellent substitutes for making payments via cash credit or debit cards.
Many times people get confused about choosing a perfect presentation for their friends or family members during any occasion or ceremony. Gift cards can be the perfect option for any type of presentation on any occasion. If you want to avoid bank overdrafts or excess spending, you can use gift cards. Using gift cards during any purchase will help to control excess spending. While you use gift cards, you need to make your expenses within the amount mentioned in the gift cards. Gift cards can easily be used while you make any purchase.
Limitation of Gift cards to check
Among several advantages, gift cards also come with some limitations. Gift cards have a specific duration to use, and one cannot use these gift cards if they are not used within this time frame. Sometimes, companies may charge inactivity fees if customers fail to use the card.
If you lose the gift card or if the gift card is stolen, it can be a problem for you. So, it is necessary to make a note of the gift card number.
Differences Between Store Credit Card and Gift Card
Gift cards and store credit cards are both beneficial for the customers as well as for the companies. However, gift cards and store credit cards have some basic differences.
Gift cards contain a specific value that is used by the customers. At the same time, store credit card contains a flexible value. Store credit cards do not have specific value like gift cards.
Gift cards can be redeemed by anyone who possesses the card. Whereas store credit cards are linked to specific customers’ accounts. Hence, no one can use these credit cards other than the customers whose account is linked to the card.
Customers can use the gift card by just scanning it or entering the code. In the case of store credit cards, customers can enjoy the benefits while checking out the payment process.
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The above discussion on store credit cards and gift cards will surely help customers understand the differences between these two strategies. Customers need to follow the guidance while opting for these two types of benefits.