5 Things To Consider Before Signing Up For A Store Credit Card

by Connie Mei · 4 comments


Many times, you’re at a store paying for your items when the cashier asks “would you like to save 20% off your purchase today by signing up for our credit card?”. Sounds like a great deal, doesn’t it? You’re inclined to say yes, fill out the easy application and have the instant gratification of saving on things you were willing to pay full price for. Is it too good to be true though? It very well might be.

Retail stores have been tempting customers for years to sign up for credit cards with discounts, free gifts, and special promotions. While it may seem like a no-brainer to sign up and get instant savings, there are longer term implications that can affect your personal finance for years to come. Make sure you consider these five important things before signing up for a store credit card:

Your Credit Score May Be Impacted

Whenever you sign up for a credit card, especially one from a retail store, your credit report will most likely be pulled. While that doesn’t seem like a big deal, it might actually have a negative effect on your credit score. This is what is called a ‘hard pull’, which happens usually when a financial institution, like a credit card company, asks for your credit report. Hard pulls can decrease your credit score by a few points. While it is temporary and usually only stays on your credit report for about two years, it is something to consider, especially if you are applying for loans in the near future.

Read & Fully Understand the Terms

When you’re signing up for a store credit card on the spot at checkout, you’re mostly likely not taking your time to read the fine print. Make sure you fully read and understand the terms and conditions of your new card though. Store credit cards don’t have the greatest reputation. They’re notorious for having very high interest rates and fees, so you should thoroughly consider the terms before signing your name on the dotted line. You don’t want to be stuck paying a high interest rate in the long run. If it sounds too good to be true, it most likely is.

Consider The Sign-Up Bonus

The number one reason people apply for a store credit card is because of a special sign-up bonus. Often, stores will offer you a discount on your purchase that day or for a specified period of time. They might also give you free products and other perks. While it feels great to be able to save money also instantaneously, you should really consider the sign-up bonus before you commit. While saving 15% on your purchase seems like a no-brainer, is it really that much of a bonus in the long run? In the grand scheme of things, sign-up bonuses are almost insignificant when compared against drawbacks, like interest rates and fees.

Do Competitive Shopping

Consider your options before you sign up for your credit card. Every store has different cards and policies and you want to make sure to pick the one that is right for you. If you’re really set on opening a store credit card, look first at the retailer where you spend the most money. You’ll probably get the most return if it has a good rewards and points program. Opening a card at a store you don’t really go to often probably won’t benefit you much. And of course, compare the terms and conditions between all cards.

Take Your Time To Make A Decision

Finally but most importantly, don’t make a spur of the moment decision. Stores will often reel you in with an engaging sales pitch at the register and many customers feel almost pressured into making a decision right then and there. If you’re interested in signing up, ask how long their current promotions and sign-up bonuses are valid for. Also ask for an application to take home and if you can mail it in when you’re ready. Many companies will also allow you to apply online. This way, you can take your time to read the fine print and make a decision that is right for you (and your credit).

Store credit cards are very enticing but they aren’t for everyone. Make sure you understand all the ins and outs of the card before you sign up. Otherwise, you can really do some damage to your credit score and debt levels. Choose wisely!

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  • W. D. Carey says:

    Good article! Analyzing the perks and drawbacks of a card is the way to go. Often the options considered are either abusing a card one one hand or avoiding cards at all cost on the other, but a moderate approach can work for many.

    • David Ning says:

      You hit the key point, which is to think about the benefits before committing. With all the great reward and cash back cards out there, it’ll be hard for any retail credit card to make sense but retailers need the business and they’ll do anything to get more business.

      Keep an open mind and you might just benefit!

  • Ramona says:

    Credit cards are a very powerful tool, if used right, but can turn your life into a disaster, if you’re not careful enough. Always read the fine print and use them with care.

    • David Ning says:

      They sure are. I go out of my way to try paying with a credit card on everything I was already going to pay for and the cash back I adds up to thousands of dollars a year.

      It requires thinking about purchases before they happen but it’s worth the hassle.

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