Devil's Advocate 

Get A Store-Branded Credit Card

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This is a Devil's Advocate post.

It’s been a while since I’ve written a Devil’s Advocate post and my recent article about five accounts you should have (and four you should skip) listed a store-branded credit card as one of the cards you should skip, much to the chagrin of commenters. So, below are some excellent reasons why you would want to have a store branded credit card.

Special Offers and Coupons:
This is the number one reason why you should get a store-branded credit card – the special offers and mailings you get for being a card holder. If you loyally shop at one store, say a Macy’s or a JC Penney’s, it would make sense for you to get the credit card because they do frequently (not just occasionally, they frequently) send you coupons for percents off (10-20%) as a way of drawing you back into the store. If you love shopping at Victoria’s Secret, getting their card also gets you coupons for great discounts as well (sign up for their catalog too, they send coupons for free underwear from time to time).

Are these special offers worth getting the card? If you don’t go on a credit application binge, you’ll likely be alright and the added credit line will boost your score as well in the long run. Also, is the card worth giving up the reward points? Not if you only spend it at the store and not if you use it only for special sales, 10% off is better than 1% cashback anyday.

Easier Credit To Obtain:
If you have absolutely no credit history, it’ll be tough to get an unsecured credit card. Your only two choices are to try a student card (if you’re a student) like a Citi mtvU card, where they have no expectation of a credit history, or start with a store-branded credit card. Store-branded credit cards generally are easier on their credit history requirements because they offer lower limits and they want to make it easier for you to get the card (and spend money at their stores). So, if you have no credit and haven’t had success being approved for it with conventional unsecured credit cards, a store-branded card is your best alternative.

Immediate Discount:
I’m talking about the “10% or 15% off your purchase today” offers you see in practically every store. 10% off is still 10% off, while you might take a small credit score ding for the credit pull, money in your pocket now is better than an illusory money maybe taken out of your pocket sometime in the future. If you’re making a $1,000 purchase, 10% is a healthy $100 difference and that’s not trivial.

Are there any other good reasons for signing up for a store-branded credit card that I may have missed?

{ 11 comments, please add your thoughts now! }

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11 Responses to “Get A Store-Branded Credit Card”

  1. Dennis says:

    The only downside to consider is that these types of cards seem to encourage spending with their special discounts. I guess I don’t frequent the mall enough to be interested in something like this.

    For me, too much exposure to discounts can be counter productive to someone trying to reduce their spending habits! That is, if you fall for them.

  2. Scott says:

    Since I’m in the process of moving right now and you mentioned the VS catalog let me go ahead and comment how the ONLY two companies that seem to find me WHEREVER I go without any action on my part (for at least the last 3 moves) are Victoria’s Secret and Lego. Go figure.

  3. Flexo says:

    I use store credit cards when it will present me with discounts, and I don’t even wait for the bill to come before paying… I don’t fully trust some of the card issuers. I don’t have one for every store, just the ones I frequent, like Kohl’s (30% discounts on sale prices on already low regular prices).

    Did I take a credit score hit for signing up for a Kohl’s card? Maybe at first, but a higher total credit line creates a lower utilization ratio which helps your score.

  4. I love the Home Depot card. If you have it they periodically send you 10% discounts. On a home improvement project, that can really add up to several hundred or even a thousand dollars or more.

  5. Beth says:

    The only way to use a store-branded card is to treat it like a regular credit card (if you use them). Only buy what you’d normally buy at that store, and only go there as often as you normally would go there. Ignore the sales unless it’s something you were going to buy anyway.

    Any store card I have is simply for the immediate discount, and must be worthwhile. My credit history is in good shape, and I don’t sign up for store cards willy-nilly (mainly because I don’t go shopping that often).

  6. Michael says:

    Kohl’s and Macy’s are the only two store cards my fiance and I keep. Kohl’s usually has percent off or ‘Kohl’s cash’ back at least once a month. We usually stay pretty focused so we don’t fall into the ‘Spend $50 to save $10 trap’ and generally buy what we need and would have purchased anyways.

    Macy’s, once every couple months, has percentages off if you use your card that often coincide with clearance sales. We’ve gotten great deals on major items such as new winter coats that make it worthwhile.

    But, with these I pay them right away. In fact, just the other day, I went online the day after buying stuff at Kohl’s and paid it off right away.

  7. Moneymonk says:

    to me, store brand cards and gas cards has the highest interest rates.

    And for as the coupons/discounts, like Dennis said they encourage you to spend money that you otherwise would never think about spending

  8. NCN says:

    In the spirit of being a “Devil’s Advocate”…

    It’s super-cool to own new stuff, instead of buying stuff from thrift shops and eBay. Using a store-branded credit card insures that I’ll be purchasing new, cool, awesome stuff!

    My wallet has SEVERAL little “pockets” for various cards. My driver’s license was getting LONELY, so it was great to fill my wallet up with those nice, shiny store-branded credit cards.

    Impulse shopping rocks! Thank you, store-branded credit card. You make buying stuff that I don’t need so easy, so convenient… so totally awesome!

    Jim— great post. I love these “devil’s advocate” posts… they keep me thinking!

  9. Pretty much the only reason I would consider getting a store credit card is for the initial sign-up discount. In that case, it would be a planned thing, and probably for use on a major purchase ($2-3k range…. multiple appliances, home renovation, etc.) and I would probably cancel the card soon thereafter so I could do the same thing again at a later date.

  10. FatLady says:

    These cards can turn a woman’s purse into a low-cost weight-training device. The trick is to sign up for as many as you can get your hands on (what the heck–make up a few fake personae and get a bunch of cards from each retailer), stuff them into your wallet and the side pockets of your purse, and then as you’re walking around or sitting in traffic, you can use the purse to do curls and bench-presses.

    They also eliminate the need to buy manicure scissors, as they’ll break your nails right off whenever you try to dig them out of your wallet.

    Want to publish a book? Use the cards to turn your whole life into an open book for every marketing snoop in retailing. Steady use of a grocery-store purchasing card will let you entertain your readers with details of the brand of contraceptives you prefer, the frequency with which you treat yourself for yeast infections, the timing of your dandruff flare-ups, the dates of your menstrual periods, what and how much you drink, and what and how much you smoke. Hey–who needs to write a novel? Life is more amazing than fiction!

  11. I have 2 store cards, best buy and home depot. The coupons are cool.

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