Using Department Store Credit Cards

One of the most common things you probably hear when you shop at a department store is this “Would you like to save 10% today?” And, of course, if you sign up for a store credit card , you get that promised discount. When you are spending a great deal of money, it is understandable that saving 10% might be desirable. However, in many cases, getting a department store credit card is asking for trouble. Here are some of downsides to getting a department store credit card:

• High interest rate : You will probably have to pay a higher rate of interest on balances that you carry.
• Credit score : While having more available credit can be helpful, it is worth noting that a department store credit card is not weighted the same way as a card from one of the big banks.
• Lack of rewards programs : Beyond your initial discount, you are unlikely to receive any sort of rewards for using a department store credit card.

If you do feel that you are making a large enough purchase that the discount is desirable and worth the ding your credit score will take when you apply, make sure that you pay off the balance as soon as possible. Do not wait for it to start earning interest. Even if you are getting a discount, the basic rules of responsible credit card use apply. And rule #1 is: Don’t buy something with a credit card that you don’t already have the money for .

image source: Paul Vlaar via Wikimedia Commons