Store Credit Cards: 5 Things to Watch Out For

“Will you be putting this on your [store name] card?” “Are you interested in saving 20% today?” If you’ve ever shopped at a department store or other chain retailer there’s a very good chance that you’ve heard these phrases that preface a pitch for you to open a new credit card. Admittedly sometimes these offers can be attractive, including significant discounts and other perks you may want to take advantage of.

Of course, as with any credit card, there are some inherent dangers in opening an account as well. If you’re considering applying for a store credit card just be sure to watch out for these quirks.

Discounts might not apply immediately

One of the most popular offers and biggest reasons people decide to take a chance and sign up for a store credit card is the promise of a discount on their purchase. However in some cases that discount might not be reflected in what you pay that day. Depending on the store the discount might be applied as a credit once you actually receive your first statement for your new card. This may not make a big difference but it is something to keep in mind. You’ll also want to be sure to check your statement and verify that you did actually receive your proper discount.

There may be limits on that discount

Buying a big-ticket item and looking to pull one over by using your discount for it? You might want to think again. Most cards will have a max limit for the discount you receive — $100 is a popular number. That’s not anything to sneeze at but you should definitely be aware of that limit before getting too excited about your purchase.

0% interest? Only if you pay on time

Speaking of big-ticket items, another benefit of some store credit cards is a 0% interest offer. Typically these promotional rates run for up to a year and allow you to pay off your balance at your leisure in that time. There is one big catch though: should you fail to completely pay off your balance in the promotional period, you will not only have to pay interest on the remainder but will also be on the hook for interest on the original amount. This can be a very costly mistake so budget wisely and don’t let yourself miss that end date.

Beware of private label cards

While some store credit cards have partnerships with companies like Visa, MasterCard, or American Express (these are known as co-branded cards), others work with smaller companies to manage their credit accounts. Such cards are known as “private label” and won’t feature the Visa, Amex, etc. logos we’re all used to. With private label cards your user and payment experience might not be exactly up to snuff. There’s nothing worse than trying to pay your first bill only to run into technical issues or confusing interfaces. Worse yet you may discover that a “convenience fee” is applied to your online or over-the-phone payment. If given the option you may want to consider applying for a co-branded store card instead.

Mind your limit

Finally another thing to watch out for when it comes to store credit cards is their limits. It’s not unusual for such cards to come with relatively small credit limits — sometimes only a few hundred dollars. The problem here is that your credit score could be affected if you max out or get close to maxing out your card even if it does have a low limit. On that note also keep in mind that opening a new card will result in a “hard pull” of your credit which could ding your score. Because of this you won’t want to apply for or open too many accounts in a short amount of time.

Applying for a store credit card in order to get a sweet discount or other savings offer may be a good idea. However you’ll want to be sure to know all the details and read the “fine print” before getting roped in. Keeping an eye out for these common pitfalls will help you make better decisions when the temptation to open a new store credit card hits.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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