Is Getting a Store Credit Card Really Worth It?

9 Year Mortgage on In-Store Credit Cards

When it comes to in-store credit cards, you and everyone else has been asked by a sales clerk to apply for one.  Between aggressive sales clerks and over-zealous announcements, the enticing deal of saving 20% on your current purchase seems almost irresistible. But are they really too good to be true? The answer to that question is based solely on your situation.

To clarify, the difference between a credit card and an in-store credit card is that with the latter you can only use it at a particular store or set of stores rather than at any location. Let us first look at the pros and cons of in- store credit cards before we determine who should really be qualified for one.

Pros to In-Store Cards9 Year Mortgage - Store Credit Cards

It’s true, besides the initial savings there can be some great benefits to having an in-store credit card! Some stores will continue to offer their loyal customers with in-store credit cards with continual discounts, frequent shopper points, or even exclusive shopping days. Depending on the store, you may even be able to get free wrapping or alterations. Also, various stores will offer you their in-store credit card, but it has one of the main credit card companies logos on it like Visa, MasterCard, or American Express. If the store card you apply for comes with one of these logos on it, you are not limited to spending at only that one store, you can use it anywhere, and you will earn points with that store for using it. These are rare, but they may be one of the options you come across.

Applying for an in-store credit card can also help your credit. If you want to build up your credit before getting a major credit card with a bigger spending limit, an in-store credit card may be an option. In-store credit cards are known for being more lenient with who they approve, meaning if you have a low credit score this could be your ticket to building it up. If you are able to keep an in-store credit card for a long period of time it will help build your credit history, but only if your disciplined enough to pay it off in full every month.

Cons to In-Store Cards

Now for the bad news, in-store credit cards may not be as great as they sound. Although this is probably not very shocking, there are a plethora of negatives to in-store credit cards that you may not have known. If you apply for an in-store credit card, you should expect an astronomical interest rate, usually between 25% and 30%. Now if you are one of the few people who always pay off your debts in full, this will not matter for you. However, say you only pay the minimum payment due, then those so called “savings” you got when you signed up are all down the drain, plus more, because of the interest that will accrue on your remaining balance.

As 9 Year Mortgage previously mentioned, in-store credit cards are incredibly easy to obtain, but this is not only a perk but a downfall. Most retailers fail to check your credit rating before issuing you one of their credit cards, which means that they are offering cardholders to get into debt that they can not necessarily afford. Along with high interest rates for all, the credit limit is relatively low compared to other types of credit cards. Most in-store credit cards only allow a couple hundred dollars up to maybe $1,000, which may seem ideal but can lead to trouble. Since you only have a smaller balance on them compared to other major credit cards you may put off paying them off, focusing on your larger bills first. Don’t forget that your interest rate is ridiculously high so if you forget to pay your in-store credit card off, your amount due will nearly double in only two months!

9 Year Mortgage Discusses How an In-Store Credit Card Effects Your Credit Score

The real trouble comes if you decide to apply for multiple in-store credit cards. The following are some statistics on how applying for any credit card will effect your credit score

  • An application for a new credit card will cause a hard inquiry on your credit report, which can cost you anywhere from 3 to 10 points per card.
  • If you decide to activate and open that account, another 10 points could be deducted from your score.
  • Even if you decide to forgo the credit card, the inquiry will stay on your credit report for two more years.
  • If you decide to close one of your credit cards, that account will stay on your credit report for seven more years.

What makes up your credit score you ask?

  • Roughly 10 percent of your credit score is made up of what is called your “credit mix”; this includes gas and retail credit cards
  • About 30 percent is made up of your credit utilization, meaning the available credit you have left on your cards
  • Another 35 percent of your credit score is determined by your credit history, or in other words if you pay off your balances in full and pay on time
  • Nearly 15 percent of your credit score is determined on the length of your accounts, so the longer you have your accounts the better this portion of your credit score will be.

9 Year Mortgage on Who Should Apply9 Year Mortgage - Store Credit Cards

In-store credit cards are not for the weak or undisciplined shoppers. If you are to ever obtain a in-store credit card you have to be extremely disciplined, not only with your spending but also paying off your bills on time. If you plan to keep a running balance on any credit card, but especially a store credit card with high interest rates, you’re better off not applying in the first place.  Another 9 Year Mortgage tip is to only apply at long-standing businesses. Because of the points deducted from your credit score when you apply for multiple cards, make sure those lost points are not wasted by applying for a card at a small boutique, which has very little guarantee of being in business for a long period of time. If you plan to open a store credit card, go in to the application process with the mentality that your in it for the long haul; the longer your credit card account is open, the more it will help your credit score.

9 Year Mortgage is of the opinion that if you are going to open a store credit card for the 20% discount, make sure you save that discount for a day when you need to purchase a lot of products from the store to take advantage of the discount. Nor is it a bad thing to keep your store credit card just for the additional perks like member’s only discounts or shopping nights. 9 Year Mortgage can not stress enough that you DO NOT want any remaining balance on your store credit cards. We suggest going home and paying them off as soon as possible. Some stores will even let you first pay with your credit card (to receive the points) and then let you pay off your balance right then; if this is an option for you, take the opportunity to escape your forgetfulness and forgo letting interest build on your account balance. Another helpful hint would be to take the credit card application home and review and compare it to other stores. Get as many benefits out of your in-store credit cards as you can by applying at the right places.

Wrapping It Up With 9 Year Mortgage

The next time you find yourself being asked by a sales clerk to sign up for a credit card, 9 Year Mortgage advises you to stop and think about your commitment to such a card. Can you afford to lose a couple points on your credit score? Will you be able to pay off your entire balance every month? Will you actually take advantage of the member benefits, or let them slide by? Do you think that this store will be around for a while? Or do you have plans of purchasing a bigger ticket item in the near future that 20% off might be better used on? All of these questions and more are valid points when considering a in-store credit card. Just remember that if you can pay off your balance every month, a store credit card does have its many perks and you should take advantage of their offers.

Will 9 Year Mortgage work for me?

Not everyone qualifies or will benefit from the 9 Year Mortgage program so there is no easy answer to that question.   We are very careful with who we let into the program.  We go through a qualification process to make sure we can provide you a viable financial plan that will work before we let you into the program.  Our representatives are trained to ask the right questions and gather the information necessary to quickly find out if we can help you.  If you would like to go through this process you can Click Here to begin filling out some basic information so that a 9 Year Mortgage representative can start working on your financial plan right away.

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