by Cindy Wagner

Created on: May 16, 2008

Store Credit Cards: What You Must Know

Store Cards: Bad News
Store cards pose a threat to your established credit, and could possibly interfere with your ability to qualify for loans if you carry large balances or own too many. A discount offered for credit card sign up seems tempting, but do not acquire card after card, be selective and choose only a few. Credit scores can plummet by twenty points or more for each newly opened card. Be selective, make the decision based on the number of cards you already have and your future credit needs.

Store Credit Cards: Good News
Store credit cards are generally painless to qualify for, making them an irresistible temptation when coupled with incredible discount sales. Offered by retail stores, they can offer a chance to establish or repair a credit history as they are reported to major credit bureaus. These cards offer benefits such as bonus discounts, or early notification of upcoming sales events. Owning a small number of these cards can be beneficial as long as you are selective and choose cards that make sense for your spending style.

Store Cards: User Tips
When deciding which store card works best for your spending habits, begin with retailers that you normally shop; acquiring cards at stores you rarely visit for a one time discount is not the worth the potential damage to your credit. If you opt for cards at stores you frequently shop, the initial sign up discount coupled with future discount sales could add up nicely. Many store promotions offer 10% to 15% off sale or clearance prices when you use their store card; however, the only way to hold onto those savings is to pay off the balance before the grace period ends. If the card holder does not pay the balance off before the end of the grace period, savings will be quickly diminished. Credit card interest rates can run as high as 21% and when you carry a balance, the high interest rate can quickly dissolve any card savings.

Co-Branded Credit Cards: The Advantages

Many stores have switched to cards that are part of a major credit card company as an alternative to maintaining their own credit department. The store card they issue is co-branded, which means it is usable almost everywhere rather than just at the issuing store. These cards can be a better deal for the card holder as they often have lower interest rates and fees than a store specific card.

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