subject: Pros And Cons To Store Credit Cards [print this page] I love shopping for deals, but I get a little leery when it comes to store credit cards. I know there are so many deals offered to those who have them, but I am just not sure about whether or not store credit cards are friend or foe?
It is inviting to sign up for one of these cards at the check-out counter with the promise of additional savings if approved. My mind goes towards saving an additional $20 and not about what this application could do to my credit. In day to day spending, keeping track of how many creditors checks my credit history and how often is not a priority. Inquiries from creditors stay on your credit score for a year showing a negative impact as to how often you try to increase your credit limit. Another thing I realized is that having too many credit cards open was bad for my debt to income ratio. It doesn't even matter whether or not I use the cards or have an outstanding balance. The fact that I could potentially owe that amount adds up to future problems for lending opportunities. If I am looking to get a car loan, a bank will look at my credit and make a judgment based on what my potential balances could be to see whether or not my income will qualify me for a loan from them. As important as it is to have credit and use it to show a history of positive financial responsibility, having too much open-ended credit without the income to back it up is a negative.
I read an interesting online payday loan blog article on this subject which helped clear up my confusion. It discussed how the interest rates affiliated with these cards are often much higher than regular credit cards; the credit amounts are small and the purchasing is limited to a particular merchant. It may be a better decision to open a universal credit card and take advantage of online and email offers from your favorite stores.
I need to remind myself when I am out shopping to bring my printed coupons with me or if I have a smart phone, I can use the bar code on my phone display right at the register. Most importantly, I need to remind myself that having opportunities to save money when I otherwise would not have spent it is not saving me anything in the long run. Avoid shopper traps, a great marketing tool used by merchants.
