Building Good Credit
Why You Should Pass on Store Credit Card Offers
As you dash through the malls to do your holiday shopping you will invariably be confronted by a smiling cashier offering you an opportunity to save 15% off your entire purchase. All you have to do is open a charge account. As you eye your shopping cart full of top dollar gifts you figure that the savings might take some of the sting out of your last minute shopping spree. That’s a temptation you should probably avoid. Why? Because the small amount of savings you receive may end up costing you much more in higher interest costs later.
- The credit limits on store cards are fairly low, so it is easy to charge them to their limits. Even if you intend to pay the balance in full, the temporary hike in your balance-to-limit rations can hurt your credit score.
- If you are unable to pay the balance in full, the high interest charges of store credit cards could erase any savings you received.
- Your credit score could be hurt by having too many revolving accounts.
In the end, the minimal savings you receive through a credit card offer are not worth the possible risk to your credit. You may be better off using a Visa or MasterCard with cash back rebates.