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.
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.
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:
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!!!!
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.
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.
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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