store credit

The holidays are right around the corner and the stores have already started promotions to get customers to sign up for store credit cards. In most cases, stores will allow you to receive a discount if you sign up to get a credit card. This may sound very tempting, but when you consider the situation properly, you may not want to get the card. If you do get it, you may decide to never use it. Here are some things to consider when you are thinking about getting the card.

Many Store Cards Have No Grace Period

Credit cards generally give people 30 days, or until the beginning of the next period, to repay the debt before interest starts accruing. Store credit cards do not offer these kinds of protections. Instead, you will start accruing interest the moment you purchase the item. This means that any purchase automatically becomes more expensive because you are adding interest to the purchase.

Store Cards Carry a High Percentage Rate

Credit cards are interested in maintaining your business for every kind of purchase under the sun. As such, you may be facing APR rates of between 6 and 16 percent. When looking at a store credit card, the APR tends to be much higher. It is not uncommon to have a store card with an APR of 25 percent or higher. Keep this in mind as you are mulling over the 10% discount that comes with your initial purchase.

Applying for New Credit Can Make Your Credit Score Go Down

If you are struggling to increase or maintain a good credit rating, signing up for a store credit card may be counterproductive. This is because when you apply for credit, it will show up as a ding on your credit. If you apply for multiple cards at multiple stores, you may see a significant drop in your credit score. This is an important consideration if you already have a low credit score.

Keep all this in mind when you are at the register and the cashier is asking you to sign up for a store credit card. It may not be worth the trouble it will cause you.