Do Retail Cards have a Place in your Wallet?
We often hear the negative aspects of retail credit cards, as this type of credit card often comes with much higher interest rates and fees than typical, major credit cards. This often leaves many consumers wondering whether there is ever a good time to use a store credit card. Simply put, store credit cards may be practical for some consumers and a recipe for disaster for others.
When to use a store credit card:
- When you pay it off each month – If you enjoy using retail credit cards and make a point of paying them off each month when your bill arrives, then you likely will not need to worry about high interest rates and fees that come along with them.
- When it comes with special discounts and coupons – We like retail credit cards that come with special discounts, coupons and shopping days for credit card customers. Before applying for a retail credit card, ask a store clerk about the perks of carrying this card. If you shop frequently at this particular store and are afforded special discounts by being a card carrier, it may be worth your while to apply for it.
When NOT to use a store credit card:
- When you shop more because you have the card in your wallet – Many studies have shown that consumers will spend more if they have a store credit card in their wallet. In other words, store credit cards often create a feeling of having more money and, in turn, these consumers spend more. If you find yourself doing just that, a store credit card is probably not right for you.
- When you are unable to pay off the balance each month – If you know there is very little chance of you paying off your retail credit card each month, it is probably best not to use one, as the interest paid on these purchases will mount very quickly.
- When there is no discount or benefit from using the card – If the store does not offer special discounts or benefits for using the card, it is probably best to ditch it in favor of a major credit card with a low interest rate.
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