Special report: The Business Herald investigates the cost of using credit cards

Store card deals can be an effective way for retailers to entice customers, but consumers aren't signing up in droves to lengthy interest-free offers, says Noel Leeming chief financial officer Mark Conelly.

The cards, operated by finance firms such as Fisher & Paykel Finance and GE Capital, have in recent years come to virtually replace traditional hire purchase at many stores.

Noel Leeming, which also operates Bond & Bond stores, offers its customers GE's Gem Visa and Creditline cards.

Conelly said store card offers could help attract potential customers through the door.


"They speak to a section of the market that are interested in credit," he said.

But Conelly said customers that entered the store after spotting a promotion did not necessarily take out the maximum interest-free term.

"Often people come in off the back of a 48 months interest free promotion but they don't necessarily take 48 months - [usually] they take a lesser term."

Conelly said only a small proportion of total sales at Noel Leeming were made on store cards, which were easier for retailers to administer than hire purchase agreements.

"Store cards are more flexible for the consumer - once they've got the store card they can go to a number of retailers and basically just show the card, and assuming they've got credit, make a purchase."

While they have seen a surge in popularity in recent years, store cards are by no means a 21st century development.

Queen St department store Smith & Caughey's has had a store card for so long that its executive director, Terry Cornelius, was unsure exactly when it was first offered to customers. Smith & Caughey's store card is operated internally, rather than by a finance firm.

Consequently, the interest rates are much lower than those charged on cards like Gem Visa and Fisher & Paykel Finance's Q Card.

"Our business is not making money out of the store card," Cornelius said.

"It is for the convenience of our customers." He said the card was an effective means of encouraging loyalty. "I think a lot of people take pride in having a Smith & Caughey's card in their wallet."