Should You Get a Store Credit Card?

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You approach the register with your highly discounted items in one hand and the coupon you brought in the other hand. You’re feeling good about finding such fierce clothing at such great prices when the inevitable occurs . . . the gal at the register cheerfully suggests you open a store credit card account with the store and receive an additional discount. If you’re like most people, this thought crosses your mind: “Well now, that sounds like a good idea.” But before you hop at the chance to grab yet another credit card you need to stop and quickly analyze what this nominal discount will actually do to your credit rating.

The Store Credit Card Trap

What you may not realize is that clerks in stores are trained to get customers to fill out credit applications almost as much as they are trained to know about the merchandise they sell. Salespeople are given quotas to fill as to how many credit applications to bring in. In some instances, managers stress credit applications more than they do the actual sale of merchandise.

Credit is a big deal to retail stores. If a store can get you to obtain a credit card from them then chances are you’ll spend more and wind up paying some interest at some point. This makes you a more attractive customer.

Now you know why every time you go through the checkout line the person at the register asks you, “Can I save you 10% by opening a card for you today?” They’re not doing it because they really want to save you 10%. They’re doing it because they’ve been trained to and because they have a quota to fill.

Store Credit Cards: Just Say No

Once you start to think of a store credit card as a product – instead of some sort of extra the store offers as a courtesy to their customers – then it’s a little easier to decline the clerk’s offer for a credit card application. After all, if you went in to buy a bag of oranges at a grocery store and the clerk at the register asked you, “Can I interest you in this loaf of bread too?” you might think to yourself you don’t even need the bread and how weird it is for the clerk to offer you bread at the checkout. The same thing with store credit, you already are paying for the item and the 10% discount is small compared with the high increase rates (upwards of 21%) store credit cards carry.

Some other things to consider before opening a store credit card

1. Opening a new credit account can be like adding another straw onto the metaphorical camel’s back. Stores want you to open a credit card because you’re more likely to spend more than if you were to spend with cash, and you might choose to shop at that particular store over a different store simply because the credit was extended to you. Not only is the store trying to get your money, but the store is also trying to make you a loyal shopper. Do you really need to add another credit card to your wallet’s arsenal?


2. You should also realize that applying for a store credit card will absolutely affect your credit score, even if your application is denied. Having too many inquiries on your credit report makes you appear to be a perpetual credit hound, and this can lower your chances of eventually getting approved for a car loan or mortgage.

When to Consider a Getting a Store Credit Card

There are a few (very few) cases where getting a store credit card is a good option. When you are buying large purchases (over $1000) like furniture or appliances, the discount offered by a store credit card can be quite substantial. Also stores, like Macys, tend to give a great deal more flexibility to returns on purchases made via their store credit cards, versus other forms of payment. Also deferred payment options can be a great way to finance a purchase, without incurring any fees or interest (note that if you don’t pay the bill in full by the end of the deferment period, the creditor will often assess interest on the purchase STARTING FROM THE DATE OF PURCHASE- meaning for 12 month deferred payment option, the creditor will tack 12 months worth of compounded interest onto your amount due if the bill is not paid in full by the end of the deferment date).

Times to Consider a Store Credit Card
Making a big purchase like furniture, wedding dress, jewelry,etc.  The additional 15% or so off can make a huge dent when making a large purchase.

Deferred Payment is available. This is particularly useful if you’re buying furniture for a new house or apartment and may not have cash due to a large down payment or deposit. Look for a deferred payment period of at least 3 months (6 is better) and make sure to pay the balance off at the end of the period. Some companies may charge you the interest accrued over the deferred period if the balance isn’t paid in full at the end of the period.

You need to build your credit rating up. Store credit cards are often easier to obtain than say a bank credit card and can be used to build up your credit ( of course you need to use it responsibly, they also carry higher interest rates).

So What’s the Verdict on Store Credit Cards?

Unless you’re making a major purchase, like furniture or appliances, or it’s probably best to skip the store credit card and use another form of payment.

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  1. choco_gnome says

    AMEN to that!
    i work part time at a major retailer and that’s ALL i ever hear! its annoying and the management practically jams it down your throat.

    High sales? doesn’t matter. Consistent positive customer feedback? still doesn’t matter. Curse out everyone in the store show up late, do what you want but open several charges per shift? Golden!

    I had one manager lingering over my shoulder as i was ringing up a customer and saying (not so subtly may i add) to get her to open a store charge, how she looks like the kind of customer who needs a store charge and even after i asked her and went through the quick spill and she shut me down – he says “try harder!”
    it is SO sickening!

    beware most of those store credits have high interest rates – sometimes as high as the high 20s. Only if you really shop at that store often enough and work out which sales you’ll hit and when AND try to pay off your balance each month.

  2. rochelle586 says

    This is very true.  I worked at JCPenney’s for quite a while, and there are different goals for part-time and full-time employees.  I don’t know if this still goes on, but we used to be paid $2.00 cash per charge application received.  The managers were constantly on our cases about wrangling in customers.  And yes, the accounts do come with high interest rates.  I strongly suggest you think twice before opening a store account!

  3. Fasshonaburu says

    I was just wondering if it’s EVER a good idea to get a store credit card, do you have any examples of ones you think are worth it?

  4. blackplaid says

    if you shop at a store enough you can save a decent amount of money by taking advantage of promotions linked to using the in-store card.  this is only beneficial though if you pay your balance in full every month early enough as not to accrue interest.  the easiest way is to charge it on the card, go home, get online, and pay it off immediately.  this takes some discipline, but it can be done.

  5. says

    As someone who worked in customer service I know about this sort of stuff myself…. I worked at Hollywood Video. We got prizes for selling these movie meal deals, or they would give parties to the district who sold the most, etc. That’s how it works in retail stores too, so that’s why they’re relentless about getting you to go with a credit card. There is also generally pressure from the boss. Just be firm and say no, no, no. They get the message. I didn’t really care about meeting the quota myself, so I didn’t push people.

    Also, I only have one store credit card, and I never use it! A Victoria’s Secret Card.

  6. says

    Heads Up for this !
    This post is really truly.
    I can still remember the annoying feeling I felt when one of the
    store personnel indirectly forced me to sign up a card with them.
    It may be a good idea if you often shop at their store and you get big perks
    as you shop.
    It’s not a good idea however to secure a card when your finances are not that stable.
    Chances are, you’ll be paying for interest fees forever !

  7. Laura says

    I think Banana Republic is a good store card to have. ONLY if you need those kinds of clothes for your work or lifestyle. If the answer is YES, you should wait for the VERY beginning of thier 40% off sales, (the merchandise in normal sizes goes QUICK, especially online) then you can use your real money to pay the bill off every month… if you have the will power.. you can save a LOT of money doing it that way.

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