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5 reasons to decline store credit cards

You'll be hearing lots of these offers as the holiday shopping season gears up. Here's why they're not in your best interest.

By Stacy Johnson Nov 3, 2011 3:26PM

This post comes from Jason Steele at partner site Money Talks News.

Seems like every time you visit some stores -- especially department stores -- you're asked if you'd like to sign up for the store's credit card.


While I used to consider these offers -- and occasionally accept them -- I've now concluded it's almost never a good idea to apply at a store. Here's why:

  • Opening a line of credit shouldn't be an impulse decision. Before you choose to open an account, shop around. Or at least take the time to understand its terms and conditions. While you're standing at the checkout counter at a department store isn't the best time or place to do that.
  • You might not be getting the best signup bonus. When signing up for a store credit card, you may be offered 10% off your purchases or perhaps some free merchandise. But is that really the best deal out there? I've been offered store credit cards just for a one-time savings of 10% on purchases that were under $100 -- a negligible signup bonus by credit card standards. By taking the time to research competing offers, you may find some incredible signup bonuses that you're missing out on. Post continues below.
  • You don't really need a store's credit card. The credit cards you choose to carry are an important financial decision. Choose the ones with the lowest rates and fees or the best rewards. Just having a store card because you shop there occasionally isn't an important consideration.
  • Having a store card limits comparison shopping. Store credit cards are all about encouraging customers to return by offering rewards. This causes some customers to ignore better prices at competing retailers.
  • Store cards don't have the best terms. You may intend to pay off your balances every month, but sadly, many people don't. Store credit cards aren't known for their low fees or competitive interest rates.
When you should apply for a store credit card

Although there are many good reasons to avoid store credit cards, they can still make sense in some circumstances.

For instance, some friends of mine purchased a new home and needed several thousand dollars' worth of appliances. After shopping around, they decided to buy from a large home-improvement store that was offering a great deal and free delivery. They'd also investigated the store's credit card before applying.


They ultimately concluded that the terms of the card were acceptable, and the discount on their large purchase was worth taking out a new line of credit.

More on Money Talks News and MSN Money:

Nov 3, 2011 11:28PM

I agree, in general, with not getting store credit cards.  However, after I was forced to declare bankruptcy, credit was impossible for me to obtain.  Until Target, that is.  Target offered me one of there store credit cards which I used once a month and paid it off each cycle.  At the end of one year, Target offered to upgrade my store card to a VISA!  What a great step in re-establishing my credit!  Thanks, Target!!!!

Nov 3, 2011 8:07PM

I tell you right now: I need a Kohl's store card. You cannot beat the discounts, cash coupons, great customer service, etc. you get there.

Nov 3, 2011 8:08PM
I must say though, the Home Depot card is great. 10 percent off my purchase saved me 200 bucks on my washer and dryer. I was also able to pay off the card within six months, which made the purchase interest free.  If you are able to pay these interest free deals off in time, they are great. If not, the interest is about 19-23 percent for the whole original purchase. OUCH!! Good deals like this can be found but read the fine print. Circuit City screwed me and well that's my own fault. Must not make impulse decisions.
Nov 3, 2011 7:18PM

Here's something else that readers may be interested in knowing.  I applied for a card from a department store to take advantage of a sale.  The item I wanted was 50% off and if I applied for a card, I was given another 30% off.  So, I bought my items with my new card and walked out.  I pay my credit cards off every month, so I really didn't pay much attention to my account for a while.  Every month I go online and check charges, interest rates, etc and was surprised to find out that my account had been closed.  Not only did I take the "hit" for applying on my credit score, but now I had an account that had been closed due to "inactivity".  I only had the account for three months and had paid it off the first month.  I didn't realize that they expected me to buy things every month in order to keep me as a client.   I've had some credit cards for years with no activity and have not had the account closed.  You would think that they would have least sent me a letter or an e-mail saying they were considering closing the account.  Well, I now use the Big Four (Visa, MC, AMEX, or Discover) as all department stores take them anyways.

Nov 3, 2011 7:11PM
One thing not mentioned is that "store credit cards" can affect your credit rating as a sub prime type of card similar to getting a loan from a finance company rather than a bank. I used to have a store card and it showed up as a negative simply due to the fact it was a high interest store card and not a bank card.
Nov 3, 2011 10:20PM
I do keep a Kohls card, wait for those 30% off coupons combined with Kohls cash rewards.  It can add up when you have two teenagers and are buying clothes all the time because of growth spurts, as long as you shop the sales at the same time, hit the clearance racks and pay the balance off every month.  Home Depot is the same, as long as you take advantage of the discounts and pay it off before interest is charged.  Other than that, I have to agree with this article.
Nov 4, 2011 10:24AM
If you can not afford to pay cash for it you don't need to buy it.  Debt living has been the ruination of our society. We need to pay as we go or don't buy it.
Nov 3, 2011 10:31PM
Macy's is the best.  I buy clothing every month and pay the card off.  You usually get 20% off at the register.  They have all sorts of coupons that a cashier will usually scan for you, even if you didn't bring one.  I usually get my purchases between 20 and 60% off.
Nov 3, 2011 7:46PM
I buy cloths at least once a month. I have a CC for that store I buy from the most and that is the only store CC I have. It gets paid off each month so I pay no interest. And I get discount coupons in the mail all the time for savings. This is the only time I would say get a store CC.
Nov 4, 2011 1:31AM
I got a Macy's card a few years ago while Christmas shopping with my sister.  She and I bought a few hundred bucks worth of Christmas presents and the new card came with a 20% discount on purchases that day, so we saved over $60 on top of store discounts.  We got our sister-in-law $220 earrings that were on a 50% last-minute Christmas sale for $80+.  My sister got her son a the then hard-to-find $99 Wii air guitar game for $40 because she had a half-off coupon for it plus the card discount - for which she reimbursed me later.  I haven't used the card since, but it was worth it that day!
Nov 4, 2011 11:23AM

I guess I am one of the few who prefer cc over cash.  I have all the control and my cc has what ever I give it.  Love taking advantage of the retail discounts and rewards programs.  To me it is legal tax free money.  In my opinion when you pay by credit card you have more options when things go wrong.  I say if you are financial savvy cc are the way to go. It amazes me sometimes when it reads like the credit card had a mind of its own.

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