Store Credit Cards

Many retail stores offer fine discounts on purchases if you apply for their store credit card. It may seem that you are getting quite a bargain at the time, but a word of caution is warranted here.

Consumer credit advisers warn that opening too many lines of credit may actually hurt your credit score. Having multiple credit cards also makes it more difficult to keep track of your balance due dates.

Experts suggest that if you sign up for store credit cards, you will probably face high interest rates if you fail to pay your bill in full by the deadline.

Retail stores such as:

• Wal-Mart
• Macy's
• Sears
• Bloomingdale's
• Sak's Fifth Avenue
• Target
• Kohl's
• Neiman Marcus
• JC Penny
• Nordstrom
• Barneys
• Gap

and the list goes on and on, offer special teaser deals which entice shoppers into signing up.

Lowcards.com says that there a few bargains amongst the many retail store credit cards, provided you pay the balance off each month. Otherwise you may get a 10 percent discount on a purchase which definitely does not justify a 28 percent interest rate.

Besides the fact that retail companies generally charge a far higher rate than bank cards, these store credit cards have a shorter grace period.

If you are the sort of person who stays on top of your finances, and pays your bills on time, you may be able to handle the added responsibility.

It may also be beneficial if you are trying to rebuild your credit such as after a bankruptcy. The stores are not too choosy who they allow to apply for their credit cards, and they are easier to get. Then after paying off the bill on time for a few months, you could discontinue use and apply for a major credit card.

Another reason it may be beneficial to get a store credit card is to make a large one-time purchase. If the item you are buying is in the thousands of dollars, a 5 or 10 percent discount up front can make a big difference. Then make sure you pay it off right away. Otherwise, a 10 percent break on a small item is not such a wise idea.

If you are new to the United States and need to build up your credit, store credit cards can get it started.

Another reason it may be okay to apply for a store credit card is if they offer a zero percent interest for six months to a year, but you should keep track of the time so you do not end up paying higher rates.

Plastic seems to make impulse shopping easier, but the burdens are greater when it comes to paying off the bills. The stores will continue to offer credit card because they do generate more revenue.

Target boasted a 22.6 percent increase in 2010 third-quarter net income and attributed it, in part, to its credit card business.

Financial experts suggest you do comparison shopping, and weigh all the pros and cons. The clerk in the store may say that it will only take a minute or two to fill out the application forms for a card, but that is not always the case. If it is a store that you frequent and take advantage of all of their perks and deals, you may have a positive outcome.

Think twice before signing up for a store credit card. Most of the retail stores accept major credit cards, so there should be no need to sign up for a store-specific card.