Reasons to Avoid Store Credit Cards

Jerry J. Jansen — Thu, 24 Dec 2009 20:24:00 +0000

Image by stevendepolo via Flickr

Store credit cards are a negative debt. Not only can they only be used in one type of store but also they most often carry the highest interest rate around. Store credit cards can be very alluring, especially at the holidays.

There’s a nice lady at the front of the store offering you a free gift if you apply for the card. Don’t fall for it!

There might be an offer at the checkout to save 20% on today’s purchase if you apply for a store credit card. Don’t fall for that either!

Not only do the store cards put you at a disadvantage from an interest rate perspective but can lead to overspending. Not only will you tend to buy more at that store rather than shop around for the lowest priced product but you’ll pay a lot more for the goods when you factor in the interest.

Credit card companies offer a very low monthly minimum payment because they want you to carry a balance. It’s much better to opt for a generic credit card that can be used anywhere as you’ll be less likely to spend and when you do spend, you’ll probably save on interest charges.

Department store spending is generally for variable expenditures and using cash for these types of expenses will help you stay on track and help reduce overspending.

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Reasons to Avoid Store Credit Cards

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