Credit Card Application In-Store To Become More Difficult?
Credit Card Applications In-Store Are Easy Now
It’s tempting at this time of year. You’re in a big store or you’re visiting a retailer’s website, and suddenly you’re faced with an offer that’s just too good to refuse. You can save 15 or 20 percent on your day’s shopping if you apply, and are accepted, for a store credit card.
And all you have to do is fill in a form at the check-out. It hardly takes a moment for the retailer’s IT system to check your credit score and for the assistant to ring up your purchases. Your discount is normally deducted from your first monthly statement.
Credit Card Regulation May Change All That
Credit card regulation, in the form of the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (Credit CARD Act), may be about to end that scenario for ever. Because the new law has a provision that allows the Federal Reserve to force stores to find out more about potential borrowers’ financial circumstances than a simple credit record check can reveal before issuing a card.
In fact, if consumer groups get their way, the Fed may soon require retailers to obtain proof of a customer’s earnings. So–unless you’re the sort of person who carries pay stubs and/or financial records around–that impulse store credit card application won’t be possible.
Credit Card Rewards Denied?
The National Retail Federation sees this as a denial of the rewards that store credit cards can bring. Mallory Duncan, the NRF’s senior vice president and general counsel, commented on the proposals that the Fed is currently considering:
The proposed rule would curtail or eliminate many routine credit granting practices that are safe, valued, and desired by both retailers and our customers. The effect of the proposed language would be much more disruptive than we believe was ever intended or envisioned by Congress…. Very few consumers carry current pay stubs or financial statements with them to the store (and) many would be disinclined to share those documents with store associates even if they did.
How Desirable Are Store Credit Cards?
Like most forms of credit, there’s absolutely no harm in having a store card providing you don’t need one. It’s those who actually need the credit who are at risk.
Because store credit card rates are generally high. Look at Macy’s as a random example that’s unlikely to be much better or worse than most. At the time of this post, the rate on its cards is 24.5 percent. That’s fine if you can afford to clear your balance every month. But it’s expensive otherwise.
One More Thing
Every application that you make for credit is likely to adversely affect your credit score in the short term. And if you suddenly make multiple applications over a brief period, then the impact could be serious.
Of course, over time the additional line of credit can actually improve your score, although with a store credit card the effect is likely to be small. But if you’re planning to apply for a mortgage, an auto loan, or something similarly substantial, then making any other application could prevent you from getting the best rate.
Disclaimer:The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.
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