Resist Store Credit Card Offers

Retail store representatives unfailingly try to get you to sign up for their retail-branded credit cards. “You can save 15% off your purchase today by signing up for our credit card.” They get incentives for each person who signs up for a credit card. So, saving you 15% is agenda-pushing at its best.

Given that store credit card interest rates are in the 20% range, you don’t really save 15% on your purchase unless you pay your balance in full when the first statement comes in the mail. And how many of us actually do that? You can get much better interest rates on non-retail-branded credit cards that you can use in multiple places.

Another reason you should say “no” to store credit cards, it’s never good to sign up for a credit card on impulse. Instead, you should shop around for a credit card based on your spending habits – not the stores where you shop. Even annoying credit card mail offers send you the interest rate and fees for the credit card. Store credit cards don’t give you that luxury. They expect you to open up a new credit card without giving you any information about the card, for $15 off your purchase.

Then, consider the impact of a new credit card on your credit score. First, your credit score takes a hit when you make the application for credit. An inquiry is placed on your credit report and influences your credit score for 12 months. The inquiry doesn’t fall off your credit report until 24 months have passed.

Store credit cards typically dole out credit like there’s a credit famine. You can count on having a low credit limit. Your credit utilization will increase which will cause your credit score to drop a little more.

The list of cons for a store credit card outweigh the pros. Don’t let an offer to save you a few bucks cloud your judgment.