Paycheck Chronicles

Don't Take The 15% Off


Tomorrow is Thanksgiving, which means that Friday is that shocking, amazing, crazy shopping day commonly called Black Friday.  If you are a Black Friday shopper, there is an outstanding chance that you will be offered the opportunity to open store credit cards.  I am telling you to say, "No, thanks," and then stick to it.  The cashier has been trained to entice you with special offers, 15% off your first purchase, and other incentives.  I'm here to tell you three reasons why these store cards are still a bad idea.

Overall Charges

Store credit cards typically have exorbinant interest rates, plus crazy high late charges and over-limit charges.  Even if you typically pay off all your cards each month, more cards equals more chances to forget or do something wrong.  The interest rates on these cards is so high that you'll wipe out any first purchase savings the first time you pay interest by accident.  And if you always carry a balance - forget about it!  You absolutely do not want to be carrying a balance on a 26.99% interest credit card when there are so many other options available.

The Lure Of The Store Card

Store cards are expertly designed to be as enticing as possible.  Coupons, extra discounts, special members only sales events...everything about a store credit card is designed to bring you into the store as frequently as possible.  $5 off a $10 purchase sounds great until you realize that you don't NEED anything from that store.  It is all about keeping you buying.

Protecting Your Credit Score

There are two reasons why store cards are bad for your credit score.  First, the optimal number of total cards is around 3-5.  Opening store cards makes it awfully easy to get beyond that optimal number.  Second, if you discover that your store card isn't a great idea, and you close it, you'll affect the average age of credit portion of your credit score.  Sure, you can try to keep it open and not use it, but eventually the issuer will close it for you.  This will have the same impact on the average age of your credit.

I know how tempting it is when the cashier offers that you can save $43 on your purchase.  Please, remember these reasons why you don't want to open a store credit card.  Happy shopping, and no new credit!


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