Store credit cards are either extremely annoying to people who want to shop in peace or a great idea for those who want to find the best possible deals. You know the drill; upon checkout at just about every store you shop, the cashier asks if you will be paying with your store credit card. When you respond that you will not, she immediately asks if you would like to sign up for a store card, it takes only a few minutes, and you can save this much on your purchase. Many people continue to shake their head in refusal while others then hold up the line while they apply so they can save 15 percent on their $50 purchase. Is it really a good idea to sign up for a store credit card? Before agreeing to apply for one, take a look at the pros and cons.
Store Credit Card Pros
There are some benefits to having a store card. Whether or not the benefits are a good enough reason to apply depends on your personal financial information and your shopping habits.
Pro: Purchase Discounts
Are there significant savings for applying for a store card? For example, if you are spending a significant amount of money and you can save 20 percent on your entire purchase by signing up and getting approved, you may want to try. If you are making a $2000 purchase you will save $400 on your bill by applying for the card.
Pro: Continuous Coupons and Deals
Additionally, there are also several discounts that come with using cards. For example, some stores offer free shipping to cardholders on every purchase they make using their card. Other stores offer cardholders a significant discount on their entire purchase on certain days of the week, every week. Cardholders also receive coupons and discount deals in the mail. If this is a store where you shop frequently, you may want to consider applying for the card to take advantage of the numerous benefits of having the card and the savings that you will receive for holding a store card.
Store Credit Card Cons
Additionally, there are several downsides to having a store credit card. Applying for a store credit card every time you go shopping is a terrible idea; in fact, applying at all might be a terrible idea if you do not consider the cons of store credit cards.
Con: High Interest Rates
Typically, the interest rates on store credit cards are very high, usually in the 20 percent range. If you plan to pay off your card balance in full each month, this is not a con. Otherwise, it definitely is.
Con: Lowered Credit Score
Any time you apply for a credit card or loan your credit score drops. Even if you are approved for the card, the inquiry on your credit report causes your score to drop several points. If you want to keep your score high, you have to keep your inquires as infrequent as possible. If you are only applying for a store card to get the discount, consider whether or not it is a big enough discount to warrant a hit to your credit score.
Con: Store Only Cards
If the store card you are considering applying for is a card that can be used anywhere, it might be worth applying for. However, if it can only be used at the store where you are shopping and you don’t shop there frequently, you probably don’t want the card because it is not worth the hit in your credit score and the potential debt you could rack up.
Store Cards: What You Need to Know – FinanceChoices.co.uk
5 Scenarios Where Store Credit Cards Make Sense – USNews.com
Curb credit card spending with a jar of peanut butter – Squakfox.com
Store credit cards are a great idea, sometimes. They are a terrible idea other times. Whether or not you apply for a store card is up to you; but you should make the decision after considering the pros and cons that come with store credit cards.