The Treachery of Department Store Credit Cards

Why Department Store Credit Cards Aren’t Always A Good Thing

Whenever someone asks me if department store credit cards are worth the perks they offer, I always tell them the same thing. No matter what perks they’re offering, department store credit cards just aren’t right for certain consumers.

The Bait

It can be very tempting to apply for department store credit cards. Each time you make a purchase at a store in the mall, a salesclerk is likely to inquire whether or not you would be interested in saving 10% (or sometimes even more) by opening a store credit card. Without thinking, you might jump at the opportunity to save a few bucks. Don’t be so hasty.

One Plus One Does Not Equal Twenty

Why aren’t department store credit cards good for some consumers? Because of their high interest rates. Department store credit cards tend to have steep interest rates with some soaring as high 28%. If you save 10 percent off of a two-hundred dollar purchase when you apply for the card, you’re only saving $20. If you don’t pay that money off in full at the end of the month, you’re going to be losing more money than you saved when you keep on paying monthly interest charges. The sad thing is that some people will apply even if they’ll only save five or six dollars by doing so. That savings gets eaten up in interest the very first month they don’t pay their balance in full.

If you carry a balance on your credit cards and you have a good credit score, there is really no reason to carry a credit card with such a high interest rate no matter how great the offers associated with it seem. What you save by applying for the card you’re going to lose when you pay the credit card company obscene amounts of interest each month.

On the other hand, if you pay off your credit cards in full each time your statement comes in, you can take advantage of the perks offered by department store credit cards without having to pay more than the price in high interest rates.

Before deciding to apply for a department store credit card, take a long, hard look at your budget habits. If you don’t pay your cards off in full each month, don’t apply for the card.


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