Store Credit Cards-Is the discount really worth it?

August 31, 2008 at 12:22 am 2 comments

“Would you like to open a store credit card and save 15% on your purchase today?”  I hear that after almost every purchase I make from almost every store.  The discount always sounds tempting, especially with those more expensive purchases, but is it really worth it?

I’m happy to say that I don’t have any store credit cards.  Now before you think me nobel, let me explain.  The main reason I don’t have a store credit card, is because I don’t shop that much at one single store to benefit from the discount.  However, there are more important reasons that you should think before agreeing to that store card.

1. Just by applying for a store credit card your credit score drops 20 points.  If you have a credit score that is considered border-line good/bad, this may drop you down to bad and hurt your chances at receiving a loan, or a decent interest rate on a loan.

2. The interest rates on store credit cards are obscenely high.  Most are around 20%, which chances are, is more than that initial discount that you received.

3. If the store credit card you are applying for offers reward points, it usually takes a lot of purchases to receive that $10 store credit.  You may find yourself purchasing more just to get the points.

Chances are sometime soon I will be opening a store credit.  Probably to buy furniture for my apartment.  If you do chose to open a store credit card, make sure you can pay off the total each month, or to close the card after paying off the total.

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2 Comments Add your own

  • 1. hunny girl  |  August 31, 2008 at 6:09 pm

    1. damn, i did not know that. i thought it boosted my score the way a regular cc would.

    2. emphasizing obscenely high. however, if someone is able to pay off the balance in full every month, then it’s not too bad. the key is paying in full and not carrying the balance for God knows how long.

    3. i think a store cc would be good if it’s from a store that someone frequently visits, say Wal-mart or Target (not sure how their rewards, if any, work). then it becomes like a cycle in which you spend, get rewarded, and spend so more. if you’re shopping there consistently, you might as well take advantage of their rewards program 🙂 .

  • 2. ashley  |  September 2, 2008 at 4:11 pm

    yeah i’ve struggled in the past with the, oh but you’ll save 15% on your purchase today! i fell for it, and it was a bad bad thing. i had a credit card cutting ceremony a month or so ago….

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