Do you feel like every time you go to the cash register to check out you are offered a store credit card? Me, too! In fact, the retail credit card industry is big business to the tune of billions of dollars. So what are 7 Pros and Cons of signing up for store credit cards?
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Pros
1. You Can Save Money At Places You Shop Regularly. The key word here is “regularly”. If you only shop at a store 3 or 4 times a year, forget it. If you are a monthly shopper at places such as Target and Amazon, for example, then it may worth it to apply for a store card. Take a look at the perks and terms of the Target REDCard (such as 5% savings and free shipping on many items) and Amazon’s several card offerings.
2. By Owning a Store Credit Card, You Are Likely To Receive Special Sale Offers and Savings- The fact that you have a store card bumps you up on the store loyalty food chain. You will probably be among the first to receive special savings incentives and early bird sale opportunities. Once again, these savings deals can be money savers for REGULAR shoppers at an establishment.
3. Obtaining A Store Credit Card May Be Easier Than Other Types of Consumer Credit Cards-The credit score/history standards for store credit cards are often lower than for many general use cards. If you are having trouble obtaining another credit card, this may be another way to work on your consumer credit rating. The big caveats being that you pay your balance in full each month, are always on time with payments, and do not carry multiple store cards.
Cons
4. Having Store Credit Cards Can Affect Your Credit Score-As mentioned above, a store credit card can be used to help build a credit score if other viable options are not available. At the same time, holding store credit cards can negatively impact your credit score. These cards are recorded as credit available to you just like your other credit cards. Also, these retail credit cards generally have lower spending limits than other cards and thereby if you carry a balance on them, that can ding your credit score, as well.
5. You May Be Tempted To Shop More Often-All the colorful advertisements and offers of special deals just for loyal customers, can sending you flying to the store or internet to buy items that you do not need. I have found that there is a lot of truth to out of sight, out of mind. If you don’t see it, you won’t be tempted by it.
6. Store Credit Cards Often Carry High Interest Rates-You will find many of these cards with 20% or higher annual interest rates. If you carry a balance, (try your best to get out of that habit), then you can find your self getting eaten alive by interest charges.
7. Many Store Cards Are Only Good At One Store Or Family of Stores-Although companies are starting to trend away from this according to CreditCards.com, a number of stores still offer credit cards that are only good for purchases within their systems. In other words, the perks do not extend beyond the store or website walls.
Doing a little research ahead of time on the particulars of store credit cards will help you give a reply that is best for your financial situation next time the cashier asks if you would like to sign up for a new piece of plastic.
For more Shopping Tips:
9 Vital Tips to Master Price Matching
The Real Cost of Too Much Stuff
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