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Are Store Credit Cards Ever A Good Idea?

In most cases, the interest rates are too high to bother.The clerk tempts you at the checkout counter: “Sign up for our store credit card and receive 10% off your first purchase.”

Store credit cards are a great way for retailers to keep tabs on their customers while providing less-than-favorable terms.

But is there ever a good time to own one?

Pros of store credit cards
If you plan to make a sizeable purchase at a store — $1,000 or more — and are looking for a 10%-20% discount, signing up for its credit card is not a bad idea.

But only if you pay it off before interest accrues.

Most store-branded cards also provide a decent rewards program that could make these cards a better option at their stores than a rewards credit card like the Chase Freedom Visa or Discover More Card.

Store credit cards also can be used to build credit, especially if you have poor credit.

These types of cards approve their fair share of applicants so if you can avoid overspending and make sure to pay your bills on time (and in full each month), these cards can help future lines of credit.

Cons of store credit cards
Store-branded credit cards are offered with initial discounts because the interest rates they charge are higher than most other credit cards.

A good credit card can offer an interest rate of between 10% and 15%, but these cards generally begin their rates at 25% and higher. Financing your everyday purchases is never a wise idea, and using your store credit card for purchases outside of the retailer is just plain dumb.

Another glaring negative are the fees that store credit cards sometimes charge.

Annual fees, over-limit fees and late fees are all steep when compared to quality overall credit cards, and unless your store card is fee free (which a few good ones are) you should stay away.

Because of the high interest rates, it’s crucial to pay your bills off in full every month.

If you know you’re unlikely to pay your bill off before interest accrues, stay away from these cards.

Instead, compare low-interest credit card offers from our extensive database.

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  1. Bobby said:
    on June 13th at 09:20 pm

    My favorite store card is Kohls! Love it when you get a 30% coupon in the mail w/ minimal exclusions on merchandise.