Four Reasons Store Credit Cards Suck

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Credit CardThings are getting back to normal, aren’t they? The credit crisis of 2008 and 2009 gave consumers a temporary reprieve from the endless credit card offers. Not only are we once again getting offers in the mail but when we purchase at stores ranging from Walmart to Macy’s we’re constantly asked to open a store credit card.

The offer seems enticing. In less than a couple of minutes we can apply for and agree to a credit card that lands us a big discount on the days purchases. 10% to 20% off of a big purchase is hard to turn down but before saying yes, remember that the card may not be as customer friendly as you think.

They Know About You

According to, the average credit card debt per household is $15,799. When they offer you that unbeatable deal on today’s purchases, they know what’s going through your mind. All you have to do is open the card, get your big discount, pay down the balance with the money you were going to use anyway, and then close the card.

But the companies behind the store credit cards know that the best intentions don’t always pan out to responsible action. Chances are you’ll continue to use your store card without paying down the balance especially since the store will send you those “members only” coupons that allow you take an additional 10% off if you use your card. They know your habits and they’re going to do everything they can to make sure you abandon your original idea and keep your card active and amassing interest.

Don’t Cancel

Cancelling the card may not be the best idea, anyway. Part of your credit score comes from the amount of time you’ve held your credit accounts in good standing. In fact, up to 15% of your credit score may come from the longevity of your credit. If you have the discipline to open a card and pay it off right away, consider using the card a few times per year. Make a small charge and pay it off before interest is charged.

Interest Rate

Store credit cards come with interest rates that may be as high as sub-prime credit cards. They’re typically that high because the requirements to be approved for a low credit limit store credit card is often very low, so they charge higher interest to offset the risk they take on. If you carry a balance on one of these cards, that 10% to 20% discount you received when you opened it will be quickly wiped out by the interest you pay.

Just Say No

It’s tempting to get that big discount and the person at the register will do everything they can to get you to say yes but there are very few reasons to open a store credit card. If you already have a credit card in your wallet, it probably has a better interest rate and its one less bill that you have to keep track of at the end of the month.

Do you have a store credit card? Are there perks that you get with your store card that outweigh the problems?

(Photo: qiaomeng)

{ 9 comments, please add your thoughts now! }

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9 Responses to “Four Reasons Store Credit Cards Suck”

  1. Mark says:

    How is “don’t cancel” one of the 4 negatives?

  2. cvargo says:

    I have 2 store cards. One is Cabelas Visa. I use it pay it off each month and get the cabelas points plus free shipping and discounts. The other one is Kohl’s, My wife and I both work jobs that causes us to go through alot of dress clothes so every month I get a 15%, 20%, or 30% when the 30% comes in the mail we go and buy some clothes and then head over to customer service and write the check out for the amount. The longest I have had a balance on that card is about 5 minutes. NEVER EVER CARRY a balance!

  3. Matthew Coan says:

    It’s true that a lot of deparment stores offer disocunts when you make purchases with their card. But what do you get, as far as rewards, from purhcases you make that aren’t at that department store? I think everyone is better off getting an all around rewards card. Alot of them offer cash back rewards for purchases made at department stores and they dont come with the high interest rates either.

  4. Jeff Crews says:

    I only have one credit card right now. It is a Chase Freedom. I am not a huge fan of store credits for the reasons listed above. I am happy as can be with my Chase Freedom and will probably always be a member.

  5. govenar says:

    I’ve opened a few store cards to get discounts, and sometimes use the coupons they send that are for cardholders only (e.g., Macy’s; though, they often have coupons for non-cardholders too, so that might not be much of a benefit).
    I think if you’re going to a burn a hard credit pull it might make more sense to get a regular credit card with a $200-$500 signup bonus.

  6. Shirley says:

    We did open a store credit card when we bought a new washer, dryer, refrigerator and freezer from that store. It carried a 20% discount and free delivery, installation, and haul away old appliances if you used the card. Since we paid it off at the end of the month, it was probably one of the best deals we ever made. 🙂

  7. Emilio P says:

    We have a few credit cards and store cards. We almost never carry any balance on them. Over time we built a savings account that we use as a buffer to pay off credit cards after coming from a vacation and rebuild it over time.
    Savings on some store brands can be enticing. Best Buy store cards offers about 5% in store credit (Their rewards program is a bit complex, but it’s one of the most rewarding in my opinion, and it does indeed works by tempting me to concentrate certain purchases at that store).
    Another card that I might consider is Target. They advertise they offer 5% rewards on every purchase; not just on opening day.

    The main issue with some store credit cards is make the effort to get online statements and if possible; get bill notifications via your bank’s web site. On the same store card; two years in a row; we got the paper statement while we were traveling and ended up paying it two whole days later; for which Citibank (The issuing bank) graciously charged us $ 25 in fees and would refuse to credit us back after several phone calls; and I’ve been tempted to cancel all my cards issued by Citibank. Other than that; if you’re organized with keeping track of statements, rewards do add up in some cases.

    • Vonetta says:

      I’m not sure why you’d still get paper statements nowadays when it is so easy to pay online. Plus, the due date is the same every month, so I don’t understand the problem with paying your bill late. The banks don’t play around, they will charge you a late fee or worse, raise your interest rate.

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