Pitfalls of Store Credit Cards
A lot of people will be shopping for school supplies and clothing in the coming weeks, especially with many states soon having sales tax holidays, when these items are exempt from sales tax. With the shopping will come credit card offers from stores, many of which offer discounts in exchange for signing up for one.
These cards, however, can lower your credit score and get you into debt fast. They tend to have high interest rates, generally above 20%. Stores that offer credit cards generally already accept the major credit cards, which will usually have lower interest rates.
Also, many retailers don’t check your credit when you sign up for their credit card. This can result in people getting cards who simply can’t afford them. Couple that with high interest rates, and you might be in debt for a long time. Sign up for multiple cards at once and your credit score will drop significantly.
Another pitfall is the high interest rates will usually cancel out any discount you might have received for applying. Therefore, you might sign up for a card because of a discount, but end up paying more because of the high interest rate.
If you insist on signing up for one of these cards despite the pitfalls, you need to pay the balance in full every month before it starts accruing interest. That way, you can actually take advantage of any discounts you initially receive.
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