Department store credit card sign ups always have ridiculous tag lines that make you think “Wowee what a steal?! Where do I sign”. Especially this time of year, as you stand by the register and the cashier rings up all the expensive gifts that aren’t for you, it might be tempting to take that one time discount, but the devil is in the small print. Before you sign up for your next department store credit card, read on to find out why this is a terrible idea.
Theres a reason why department store credit cards are so easy to get and are often advertised as easy ways to get credit if you have bad or no credit. It’s because they are a terrible idea. Here are just a few reasons why:
Not the best sign on bonus
Most store credit cards offer sign on bonuses that are good for one time use. While the initial payoff is almost immediate, after that you are stuck with whatever terms you agreed too. Other major credit cards offer sign on bonuses lasting 6 months to a year - a much better pay off in the long run.
Applying and approval are NOT instant
Every time you apply for one of these cards, the store runs a credit check which in turn hurts your credit score. So put the pen down and walk away.
High interest and high fees
Unless you plan to pay off your balance in full each month, which of course you will, you’re looking at ridiculous interest rates and fees on any running balance you have on your card.
Hidden fees and minimum purchases
Even if you intend to use your card responsibly, some stores require a minimum purchase amount each month or might charge a maintenance fee should there be no activity on the card. In other words, they charge you just to have the card.
They prevent comparison shopping
Often these cards can’t be used else where, so you’re stuck shopping at the same store to earn the penny rewards you were promised when you first signed up
Low Credit Limit
Unlike major credit card issuers, store credit cards usually don’t have high credit limits, and if you are going to apply that card straight away to your current purchase chances are you’ve already used ⅓ of the credit available. Ideally, balance owed on a card should hover around 20% of the initial credit limit.
And finally...
Getting rid of them isn’t easy
After you’ve paid out your balance and all the interest, closing a credit card never helps out your credit score. Because of the way credit scores are calculated, it will almost always shave a few points off your credit score.
Getting your first credit card, or any credit card, should be a well thought out and researched choice. Just say no to the Gap card. The possibilities may seem endless with your shiny new $250 credit limit until you see your first bill and you’re being charged 20% interest on the pack of gum you bought. There are other ways to finance holiday purchases, you just have to get creative or go to craigslist.
Est natus eum commodi vel. Sit et tenetur perspiciatis consequatur dignissimos ut in.
Non voluptatibus explicabo distinctio corporis. Ut ea omnis nostrum fugiat quas.
Minima rerum blanditiis mollitia distinctio ullam. Rerum inventore non blanditiis ut eaque. Recusandae suscipit voluptatem tempora dolores. Sed saepe saepe dolor aut sapiente. Quia laboriosam deleniti id. Reprehenderit ea magni aperiam nobis eveniet quia.
Iusto consequatur voluptas deleniti ut. Dicta fugit rem eos autem. Vero at mollitia minima laudantium vel voluptatem non sed. Nihil expedita placeat sit aut officiis et libero.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Consequuntur ab distinctio vitae quasi iste inventore ut quia. Ut velit rerum officia qui rem necessitatibus culpa. Eaque non aut dolorem ratione ex.
Quia et delectus quia eos dolore illum perferendis consequatur. Quis fugiat esse reiciendis ratione eos aut. Quas consequuntur hic commodi vero et porro. Dolor sint assumenda vel magni dolor officia minima. Ut et maiores qui vero commodi omnis enim.
Itaque libero necessitatibus mollitia neque a reprehenderit et. Natus inventore animi enim minima suscipit soluta vel. Quasi sint blanditiis laudantium voluptatem illum atque dolorem quidem. Repellat quo amet voluptatem accusamus occaecati voluptates earum. Consequuntur sit quam eum aut amet excepturi. Beatae voluptatem ipsam aut quis. Laboriosam consequuntur aut consectetur saepe impedit et dicta.
Vero earum ut cumque blanditiis aperiam. Est accusantium occaecati delectus asperiores suscipit sed. Quod nam tempora quam. Perferendis explicabo labore maxime ipsa.
Vitae ad accusantium est nesciunt ut dolor at. Temporibus et debitis architecto dolorem nobis delectus illum praesentium. Quasi nostrum laborum accusamus quod.
In quidem molestias facilis incidunt sint doloremque. Exercitationem veniam consequuntur sed laboriosam. In est at eum eos voluptatem asperiores est. Aut sint ut odio ut illum. Vel et dolorem nihil sed. Atque nobis ut illum.
Accusamus velit iste laboriosam nihil ut sint. Cum eveniet ipsam ex quia totam enim. Consequatur ex sequi voluptatum vero suscipit at. Ab consequatur commodi cumque aut atque beatae. Officia porro architecto ut accusantium expedita dolor numquam. Voluptatem autem deserunt illo molestiae aliquid voluptatem. Et quia molestiae sint fuga sint.