You\u2019re at the checkout at your favorite store — Target, Walmart or Macy\u2019s perhaps– and the store clerk offers you 20-percent savings if you open up a card today. And then on future purchases you\u2019ll always save 10%! Tempting, right? \u00a0Sure. However there are a few things you should consider before saying \u201csign me up!\u201d<\/p>\n
High fees:<\/b> \u00a0We all know carrying a balance on a credit card means you\u2019ll pay interest. But did you know that the interest rate on a store card is higher than a non-store credit card? \u00a0Non-store credit cards carry around a 13% interest rate (if you have good credit) whereas a store card will be much higher. \u00a0The Target card I just was offered came with a 23% interest rate! If you get caught carrying a balance on your credit card, your wallet is gonna take a hit. \u00a0Only use a store card if you\u2019re able to pay it off in full each month.<\/p>\n
Credit check: <\/b>They don\u2019t just give you the credit card without checking into your history, specifically your credit history. That credit check will cost you — your credit score will take a hit due to an inquiry on your report. If you\u2019re hoping to get a car loan or some other loan in the near future that requires a credit check, be careful with those inquiries.<\/p>\n
Annual fees: \u00a0<\/b>Non-store and store cards alike may have annual fees. Whatever kind of credit card you\u2019re getting, make sure you understand whether an annual fee may be charged.<\/p>\n
Pressure: <\/b>Maybe you\u2019ve worked in retail, or maybe you know someone who has worked in retail — ask them about their quota. Many times clerks are under tremendous pressure to sell you the cards and are required by management to meet a certain quota. Do what\u2019s in your best interest, not what\u2019s in thiers.<\/p>\n
Promotions, promotions, promotions: <\/b>Let\u2019s say you decide to sign up. Just because the card is in your wallet, doesn\u2019t mean you\u2019ve got extra cash. Stores will encourage you to spend on their card by bombarding you with promotional offers like sales and discounts that even for the most disciplined among us are hard to avoid. When those promotional offers come your way, alarm bells should go off in your head. \u00a0Stick to your budget (you\u2019ve got one of those right?!) and don\u2019t give in to those \u2018good deals.\u2019<\/p>\n
But I\u2019ve heard they\u2019re a good way to build credit? <\/b>Store cards can be a simple and easy way to increase a low credit score or establish credit, but have an honest conversation with yourself before signing up. \u00a0If you tend to easily be persuaded by sales and good deals (like I am!) this may end up putting you into debt instead of improving your credit score.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
You\u2019re at the checkout at your favorite store — Target, Walmart or Macy\u2019s perhaps– and the store clerk offers you 20-percent savings if you open up a card today. And then on future purchases you\u2019ll … Continue reading