What You Should Know About Store Credit Cards

It is likely that you have been in a store shopping when you were offered a store credit card. These offers are usually made by the cashier as you pay for your merchandise, and they may offer you a discount on your purchases if you choose to sign up. While the discount may sound like a good idea, there are some things you should know about store credit cards.

The first thing you should decide is if you need another card. Do you already have multiple credit cards? Are the balances on your existing cards high, and are you having trouble paying them off? If the answer to either of these questions is yes, this may be a sign that you should avoid the store credit card. In addition to this, signing up for store credit cards can have a negative effect on your credit score. While applying for one store credit card may not be a problem, doing this too many times can substantially lower your score.

Another problem with these credit cards is that they are very tempting to use. While you may temporarily have an increased amount of purchasing ability, the money you borrow will have to be paid back, often with interest. Retail stores don't care about your personal finances, and are only concerned with getting you to spend as much money as possible. Many people don't realize that store credit cards could carry interest rates which are 40% higher than standard credit cards. If you generate a large enough balance, you may be in debt for years, long after the merchandise you've purchased has worn out.

Another problem with store credit cards is that they can only be used with the store chain which issued them to you. This means they are not flexible, and will not be accepted at most places. Even if you only plan on using the credit card in order to get a discount, having too many accounts can make you a risk to lenders. Because of universal default, the interest rate on your other credit cards could be increased if applying for the store credit card has a negative impact on your credit score.

It is important to realize that store credit cards benefit the stores more than the consumers. The interest rates are high, and you are forced to shop there. Applying for these cards could also have a negative impact on your credit report or score. You should weigh your options carefully when you're thinking about getting these cards.

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