How In-Store Credit Cards Can Hurt You Financially

You’ve probably heard it dozens of times – you’re going through the checkout at a well-known discount store retailer, and the cashier offers you 10% off your order with their in-store credit card.

This offer seems quite convenient for many people – especially if they’re making a large purchase. Not only do you save money on your large order, but you don’t have to pay it back right away, but can it hurt you financially and damage your credit?

Many consumers have several store credit cards, one from each of their favorite retailers. The problem is that these credit cards have several drawbacks. For one, most in-store credit cards come with a significant fee. Often, the initial costs are more than what you even save when opening a credit account. Additionally, they typically have very high-interest rates – usually 22% or higher – and most of these cards do not have an introductory rate or grace period, meaning they begin collecting interest the moment you swipe the card.

In some cases, these cards can be helpful in certain large purchases for which you’ve already worked out a short-term repayment plan. When paying them off quickly, you can avoid heavy interest fees. However, most in-store credit cards tend to apply for a low minimum monthly payment of about 3% of the balance. As many cardholders tend only to pay the minimum, it can often take years to pay off while collecting interest the entire time. That $500 TV you bought on credit could cost you $2,000 or more, depending on how quickly you pay off the card.

In-store Credit Cards Also Affect Your Credit Score
As discussed above, in-store credit cards are a bad idea financially, but they can also hurt your credit score. Each time you apply for an in-store credit card, the store must run your credit. If you’ve already had your credit run previously in the year (rental car, credit checks, car loan application, other credit card applications), you can lose additional points from your score each time you have your credit run. The in-store cards can affect your credit score in several other ways as well:

• Credit History
  
• Number of Lines of Credit
  
• Late Payments
  

Since you likely won’t use the store credit card as often as other lines of credit, it’s much easier to forget the account, which can lead to late payments, delinquencies, or simply maintaining a maxed-out card for an extended period which can also damage your credit. If you already have several store credit cards, you may want to consider consolidating your debt or paying them off as quickly as possible. Make sure you’re making more than the minimum payments and set reminders for yourself to make each payment on time each month.

For assistance rebuilding your credit score, call Credit Repair Enforcers for a free consultation at: (954) 358-9586.

About CreditRepairEnforcers.com: 
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