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Should You Get a Credit Card from Your Favorite Store?

by Barbara Marquand

Unless you never venture into clothing and department stores, a retail clerk has probably asked you a time or two whether you'd like to apply for a store credit card.

The enticement is certainly tempting--usually a discount is offered just for filling out the application, and many store cards, if they have the VISA, MasterCard or American Express label, can be used at other establishments.

But should you do it? There's no set answer. Store credit cards have their pros and cons. Consider the following points when deciding whether to say yes.

• Your Credit Score

Every time you apply for credit, an inquiry is made on your credit history and can ding your credit score slightly. That's why it's not a good idea to apply for a bunch of credit cards before you go shopping for a car loan or mortgage. On the other hand, if you don't have a lot of credit and are looking to build a credit history, a store credit card can be a start, and store credit cards are usually easier to qualify for.

• High Credit Card Rates, Low Credit Limits

Store credit cards usually carry high interest rates and have low credit limits, so if you're looking for a card to finance a big purchase, search for a better deal.

Credit Card Rewards and Discounts

Only you can decide whether the card is worth the discount and reward options. Some store credit cards offer only in-store discounts, while others offer points for other rewards, such as airline miles. But if rewards are what you're after, you might find a better deal by comparing the host of rewards credit cards on the market, rather than just taking what the store's credit card offers.

• Your Credit Card Spending

If you're already having trouble keeping track of your credit card spending, then just say no. An additional credit card in the mix may add fuel to the fire of your burning money woes.

Credit Card Use

Some customers apply for a card to get the immediate discount, but then never use it. Remember you need to contact the credit card company to cancel the card. Just cutting it up or not using it does not cancel the account. Meanwhile, if you want to keep the account open, remember to charge something with the card once a month. Store credit card issuers often close the accounts that remain inactive after a certain period, so don't count on using the card later if you let it sit idle for six months in a drawer.

Published 12/13/10 (Modified 06/27/14)

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