March 15, 2010
- Roseburg, Oregon
The hidden drawbacks of store credit cards
By Connie Thompson
SEATTLE -- With predictions for a dismal holiday season, retailers are pulling out all the stops, including instant discounts if you open a store credit account.
But getting a store credit card now could leave you feeling Scrooged after Christmas. An instant discount for opening a store credit account can be tempting, especially during the holiday. But beyond those 10-, 15- or even 20-percent discounts come hidden drawbacks: high interest rates, low credit limits and very limited usage -- you can only use them at that store. Even if you're just trying to establish credit, money experts say store credit cards are not the best way to go. "You want general purpose credit cards that are aggressively priced, so that you get the best possible rate deal," said Adam Levin of Credit.com. If you already have a store credit account, be careful how you use it. Between high interest and low limits, it's easy to lower your available credit and your credit score at the same time. Keep your balance below 20 percent of the credit limit. Pay the balance in full. Don't add new charges until the balance is paid. And always pay on time. |
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