Pros and Cons of Store Credit Cards
Ever been offered a store credit card at checkout?
I’m frequently offered in-store credit cards. I’m told I’ll experience all sorts of benefits. Sounds like a great financial decision – but really? The short answer is, “Probably not”. Retailers know that they’ll make money on store cards. High-interest rates, low credit limits, and savings don’t make up for the maintenance involved and the risk of missing a payment. They deceptively cause consumers to shop more because they believe they’re saving money.
But let’s be fair. There are some pros to in-store credit cards. They provide rewards and bonus offers. They’re easy to qualify for when trying to establish credit or rebuild your credit score, but there are inherent dangers. They have limited use. If a balance exists when the promotion expires, retroactive interest may be charged clear back to the day of your purchase. In addition, the low credit limit can lead to a high credit utilization ratio which hurts your credit scores overall.
The advantage is for those who pay off cards immediately and never carry a balance. Just be careful to calculate the high risk involved before deciding to carry a card like this. Far better to calculate and incorporate these purchases into your budget. Plan ahead, shop sales, and search online for coupons. Then, applaud yourself for finding savings without taking on more risk! In the long run, I think store credit cards are too dangerous for the general public. So stay strong and kindly say, “No thank you”.
And if you’re struggling with credit card debt. Let Christian Credit Counselors help you. They’ll can create a debt management plan specifically for you. For more information call the Crown Helpline: 800-722-1976 or visit online at crown.org/ccc.