Mary Ann Sawyers Is Opening A Store Credit Card is Worth It

Is Opening A Store Credit Card Worth It?

            That store card the clerk offers you at the checkout line sounds great, but is it a good choice?  Store credit cards are branded with the store’s name and they often come with a large discount off your first purchase, a percentage off all purchases, 0% financing, or other incentives like free shipping at online storefronts.  Here are the pros and cons to see what’s best for you...

Reasons why a store card would BENEFIT you:

-  If you’re saving 20% each visit at a store you visit often, and pay off purchases so you don’t carry a balance, the higher interest rate won’t affect your savings.

-  If you have a low credit score, stores are more likely to approve your application than regular credit card companies.  It can be a good way to start rebuilding your credit.

-  Some store cards can be used at places outside the store.  If you qualify for a card that also has a MasterCard, Discover, Visa, or American Express logo, it can be used anywhere you shop outside the store.  For example, Costco and Sam’s Club credit cards offer cash back on any dining and at any gas stations.

DRAWBACKS to store cards:

-  Store credit card interest rates are high – regular cards are around 15%, and store cards are over 20%.  If you carry a balance, you can pay much more for purchases in the long run.  You may even have money to pay off the balance but forget to pay the bill for a card you don’t use often.

-  Store cards can negatively impact your credit score. If you plan to apply for large loans like auto or home loans in the next few months, it’s not a good idea to apply as opening the card may temporarily lower your credit score.

- Some are only good for purchases at the store.  If you can’t use the store card at other places like a regular credit card, you may be better off getting a card that you can use anywhere with a lower interest rate.  


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