If you tend to shop at large retail stores on a regular basis, you probably know that such stores offer credit cards that you can use to pay for your purchases. But before you take the plunge, you need to take a look at the pros and cons of opening store credit cards.
The Benefits of a Store Credit Card
In some ways, opening a store credit have its good points. After all, it offers you another way of paying for a purchase. Furthermore, opening a credit card may enable you to take advantage of certain promos and discounts. For example, they may offer special discounts of up to 10% of the regular price if you use their store credit card.
And if you’re trying to boost your credit score, a store credit card is another opportunity for you to demonstrate your newfound determination to pay off your debts on time. Unlike other major credit cards, it’s not as difficult to get approval for store credit cards. It’s very frustrating to have your credit card applications denied because of your dismal credit scores, when you’re trying to improve your credit in the first place. But with store credit cards, this is hardly a problem.
The Drawbacks to Opening a Store Credit Card
Of course, you will still have to endure the hassle of opening another credit card in your name. If you are not exactly a regular shopper in the store, then the hassle may not be worth it. If you’re making a $10 purchase and the store credit card offers a 10% discount, then the dollar you save may not compensate for the time and effort you spend applying for that store card.
And with this one, the interest rates can be disappointing. In 2013, the average interest rate on store credit cards is more than 25%. If you are an undisciplined shopper, having another credit card with high interest rates is simply another way for you to get into financial trouble.
So Is It a Good Deal or Not?
This question depends on several critical factors. The most important factor is you. Whether you’re trying to improve your credit score or you want to take advantage of certain promos, it’s crucial that you pay for the entire balance at the end of the month.
If they offer interest free financing for a certain period time, you should have the means to pay the required amount each month. If you don’t pay off the balance quickly, then the high interest rates can ruin you.
It also depends on what kind of savings you will enjoy. For example, if you shop in that particular store on a regular basis, then your savings for small purchases can add up if they offer a promo such as a 10% discount. And even if you are making a one-time purchase from that store, the hassle may be worth it if you are making a huge purchase, such as living room furniture or a large LCD TV.
All in all, it depends on whether you can enjoy the perks, while avoiding the high interest rates. If you can pay what you owe on time, then you can enjoy massive discounts. On the other hand, if you’re having trouble paying off your other credit cards, then a store credit card represents another hole in a ship that’s already having trouble staying afloat.