Ever gone into a department store and had a sales rep tell you at the register that you could save an additional 10 percent off your purchase if you apply for the store’s credit card?

You may have said “yes,” relishing in that extra 10 percent in your pocket.  But you should always say “no.”

The reason is that you can use the major credit cards like Visa, Master Card, Discover and American Express pretty much anywhere.  So, you don’t really need a Victoria’s Secret or a Kohl’s credit card that you can only use in those stores.
 
The major drawback is that these types of store credit cards generally carry an 18 percent plus interest rate, so you could end up paying way more for that sweater or board game by charging it and letting it sit on your credit card for months (or even years).

The advantage of store credit cards belongs entirely to the stores; studies show that people with store credit cards are more likely to shop in those stores (and rack up more debt at high interest rates).  The stores just want to boost their sales; they don’t care if you end up paying way more for that new jacket because you put it on your credit card.  They’ve made their money off you by the time your credit card bill arrives and then passed you over to the credit card company so they can make their share.

You should also be aware that stores run promotions at various times to get people to sign up for their credit cards; they might offer a greater discount or even promise you gift cards.  They also offer their sales associates incentives for bringing in completed credit applications, so you’ll feel the push to apply for a card when you check out.
 
One of the most popular rebuttals to, “No thanks, I don’t need any more credit cards,” is “You can just apply so you can use the discount, pay it off and then cancel it next month.”  You’d be amazed at how many people buy that one. And then they forget to cancel the card or start using it.

The best course of action to avoid incurring debt is to pass on the momentary savings; pay the extra 10 percent today.  Pay in cash or with a debit card.  Don’t be tempted by saving 10 percent today—because, after all, you'll be spending 18 percent tomorrow.


Contact Us today to consolidate all your credit card payments into one!