If managed correctly, a clothing account can be very helpful. Who doesn't love the idea of shopping for clothes even when you don't have money? However, as with all forms of credit, a clothing account can have its dark side. Here are some tips to manage your account responsibly, while still enjoying the benefits it has to offer.
Have a plan
Although having an account gives you flexibility in when you can go for a shopping trip and how much you can buy, definitely do not pass through those doors without armed with a plan. And no, I don't mean a plan of what you think your wardrobe is missing. I mean a budget plan.
The assumption is often that accounts are bad for your budget, but in fact they can actually make your monthly budgeting easier. Rather than spending a whole lot of money in one go or shopping sporadically, which makes consistent budgeting difficult, you can instead be making regular payments every month.
Work out how much you can afford to be paying every month, and then work out how much you can put on credit so that your monthly instalments don't go over that amount (and resist the temptation to go over it!).
Your payment plan
Always choose to make larger payments over a shorter, interest-free period. Most clothing stores give you the option of a six month interest-free payment plan (as opposed to smaller payments with interest over a longer time). That's absolutely what you should go for, for two reasons. Firstly, because it's interest-free - that's a no-brainer. The interest in a 12, 18 or 24 month plan may not look like much when looked at per month, but in total can amount up to 30%. And if you can't afford to be buying clothing in cash straight up, you probably can't be affording that much mark-up at the end of the day.
The second reason to go for larger instalments over a shorter time is because it keeps you from going credit-crazy with your shopping. If you think in terms of very small instalments, it's only too easy to get lulled into thinking it's not that much and will be easy to pay back. That would be fine, if you were only buying one item of clothing a year. Which of course you're not. So all those little instalments add up, accrue interest, and just keep coming on. Before you know it, you're paying off huge amounts for clothing that's already out of style. If you go for a six month plan, however, it's less likely you'll lose sight of the reality of credit.
Limit Your Credit
Limit how much you put on credit. I don't just mean how much you're putting on your account, but how much credit you are amassing in general. Only open one clothing account at a time. If you do want some variety by having another clothing account open somewhere else, don't put more items on the one account while still paying off the other.
A safe bet with clothing, is to as far as possible only put items of clothing you need on your account. For instance a new pair of everyday shoes when your old ones give up or a thick, practical coat when winter comes. For the things you don't actually need, rather save up for to pay in cash.
Also, from time to time the store will offer to increase your credit limit if you've proven yourself responsible with your payments. Don't feel you need to always accept the increase in credit. Unless your material situation changes with a higher salary, don't increase your credit.
Also, if you open an account in a store that sells more than clothing, still stick to just putting clothing on account. You are always more likely to run into trouble when you start putting groceries, appliances and furniture on credit as well.
Make payments on time
Whatever you do, don't miss a payment. Not only will you be paying dearly in penalty interest payments, but you'll hurt your credit score. Even paying a couple days late can have severe consequences. Make use of a debit order facility to help you make your payments regularly on time.
Some final words of advice
Finally, if you've had issues with credit in the past - that is a major red flag and you should really think twice about opening up a clothing account. And if at any time you find yourself struggling to not give in to the temptation of buying more than you need, and your payments become difficult to keep up with, cut up your card immediately. You don't need debt weighing you down in life.
There are, however, good reasons to open a clothing account. Just remember, it's easier to stay out of debt than it is to get out of debt. So if you stick to these guidelines, you should be able to shop in the peace of mind of knowing that you won't have debt holding you back in life.
Queenie Bates is a researcher and writer based in Cape Town, South Africa. This pretty much goes without saying, considering the content of this article, but she is an avid shopper. And lover of cute shoes.