Why You Should Say No to Store Credit Cards

Store credit cards are your gateway of getting great savings from supermarkets. It is almost a win-win situation – the issuer gets a cut from issuing a credit card while you extend your savings through continuous discounts. You will never have to cut another coupon just to gain savings.

But store credit cards are like trapdoor spiders. They lure you into greater savings but you will end up with a very bad financial situation. Oftentimes, it is a little bit too late to realize it that you just had something that you will not be using after all.

. Good for Stores, Bad for Others

The main reason why consumers are lured to store credit cards is the discount they offer to customers. Imagine a discount of 15% in your purchases. Oftentimes, this type of credit card is offered in appliance stores wherein customers who are a little bit hesitant to purchase an expensive home appliance. With a discount, they often agree to get the credit card just to gain the discount. It can be processed within minutes and they can take home their appliance, with store credit.

However, this type of credit card is only good in the same appliance stores. It is true that you can use the store issued credit cards to other purchases but the interest rate would often be at 20%. This interest rate is already way high compared to regular credit cards which only have an interest rate ay a maximum of 16%. Other types of transactions with the use of store issued credit cards will also be higher.

That is why most consumers who were issued with store credit cards only use them once. Although they may not use the credit card, they are still going to be charged monthly because of minimum purchase requirement.

. Damage Your Credit Score

If you already have a collection of credit cards in your pocket, chances are your credit standing is not good. Credit cards from stores do not really care who to issue the credit card even if they are already in bad credit standing. If you are aiming to improve your credit rating, adding another credit card will never help.

Adding credit cards means you are opening to another form of loan. Additional loan would are often frowned by credit bureaus. This would give the credit rating companies that you are not able to pay for what you already owe which would even drag your credit rating. Even though you pay them on time, the fact that you are extending your credit limit as well as opening up to additional loans would lessen your credit score.

. Purchase Dispute Ignored

Another bad thing that should get you discouraged from store credit cards is the inability to dispute charges and purchases. There maybe phone numbers where you can talk to regarding these problems but you will never be assured that these disputes would be honored. If you want to prove your dispute, you have to personally work on them because there are no associations that would take care of that dispute. This is a little bit unfortunate since stores should protect their customers.

However, they just ignore this since they are not really required to provide any assistance. Credit cards are only an additional offer but this is already a form of payment transaction and they are not responsible in protecting their consumers.

Just say no to any store credit cards. If you are planning to purchase something, use your own credit card. By sticking to a single line of credit, you are preserving your credit score as well as prevented on being ripped off by exorbitant interest rates of store credit cards.