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Bach’s Case Against Store Credit Cards
Posted By Jim On 12/06/2005 @ 1:10 pm In Credit,Personal Finance,Shopping | 1 Comment
David Bach, author of the Automatic Millionaire  (review ), and one of the “new” columnists over at Yahoo! Finance posted an article today giving four reasons to avoid store-branded credit cards  you’ll undoubtedly be offered when you’re doing your holiday shopping this year. The four reasons to avoid these cards are: typically higher, on average, interest rate; good chance you won’t pay off the entire balance; you’ll hurt your credit score; and you might pay your bills late. I say that if you are diligent and concerned about your finances (enough to want to read personal finance blogs), you should take the 10% off + whatever goodies they offer 99-out-of-100 times they’re offered. I do agree with Bach in that the stores do peddle them a little too aggressively (I bet sales staff are paid a hefty commission for signups).
The 1-out-of-100 situation where you don’t want to open up that card is because of reason #3 – opening a new line of credit will negatively affect your credit score. If you plan on purchasing a new car or a new home (or otherwise need to get a large line of credit), you want to stay in as low of an interest rate group as possible (highest possible credit score group) because saving $50 today isn’t worth it if your mortgage or new car loan interest rate increases at all.
However, for the 99% of diligent frugal shoppers, getting that 10% is a safe deal. If you are nervous about cashing those Identity Guard/Protection/Whatever checks from your credit card company because you’re afraid you’ll forget you signed up for the 30-day trial, then getting a store-branded card for the 10% off isn’t for you.
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 Automatic Millionaire: http://www.amazon.com/exec/obidos/ASIN/0767914104/ref=nosim/easeoftravel-20
 review: http://www.bargaineering.com/articles/executive-review-of-the-automatic-millionaire.html
 four reasons to avoid store-branded credit cards: http://finance.yahoo.com/columnist/article/millionaire/1730
Thank you for reading!