by Elizabeth Aldrich | Updated Oct. 28, 2021 - First published on Jan. 24, 2019
Many or all of the products here are from our partners that pay us a commission. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.
Opening a new store credit card may save you a few dollars up front, but these costly pitfalls can easily outweigh the discounts.
It's easy to be fooled by enticing store credit card offers.
We've all been in the scenario: You line up to pay for your purchases and the store clerk informs you that you can save an additional 15% if you open a store credit card. Even better, you can take advantage of 0% financing for the next six months.
When you're buying items for a special occasion and plan on spending more than you would in a usual shopping trip, these offers become even more tempting. But often they end up costing you more than they save you. Keep an eye out for the following red flags that should make you pause and say, "No, thank you," the next time a clerk asks if you want to open a store credit card.
Tips and tricks from the experts delivered straight to your inbox that could help you save thousands of dollars. Sign up now for free access to our Personal Finance Boot Camp.
By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.
Store credit cards come with much higher interest rates than traditional bank credit cards, with some nearing 30%. In comparison, the average credit card interest rate is nearly half that. It won't matter if you have a good credit score, either, because store credit cards won't reward you for that with lower rates. Such a massive APR will leave you with interest adding up quickly each billing cycle. Even if you plan to pay off the balance in full each month, you run the risk of overspending or missing payments.
Instead, try: A low interest credit card. Some of these credit cards come with APRs as low as 11% for people with excellent credit scores. Even without a great credit history, it's likely you can still find a card with a lower interest rate than store credit cards.
A store credit card with 0% financing might sound like a great deal, but there's no such thing as a free lunch. Hidden within the terms and conditions, you'll often find that the interest is deferred. This means that interest is accumulating during the introductory period; it just isn't being applied to your account. If you don't pay off the entire balance before the intro period ends, (even if you leave a balance of $0.01), you'll be charged all the interest that's accrued.
Instead, try: A 0% financing offer that doesn't defer interest. The best 0% APR credit cards waive interest, meaning you'll only be charged the higher interest rate on the remaining balance once the intro period ends. However, you should always plan to pay off the full balance before that time comes.
Store credit cards typically only earn rewards that can be used at that store or a sister company. You might be earning hundreds of points while doing your shopping, but if the only way to redeem them is to turn around and spend more money at the same store, how much are those points really worth?
Instead, try: A good travel rewards credit card or cash back credit card -- either of which will earn you more flexible rewards that can be applied to travel purchases, redeemed for free flights and hotel stays, or redeemed for cash back.
With so many offers floating around, you may be thinking about applying for every store credit card that offers a discount with the plan to cancel each shortly after they are paid off. This may help you save money up front, but each credit card application has the potential to impact your credit score. Each time you apply for a new card, an inquiry is recorded on your credit report. Multiple applications within a short time period can indicate you are a riskier borrower, resulting in a lower credit score.
Instead, try: One really good cash back credit card. You'll save money by earning cash back on purchases you were already planning to make. Choose one that matches your spending habits, and you could save hundreds of dollars every year.
On the surface, store credit card offers may look advantageous. However, there are some serious pitfalls that can cost you money and quickly outweigh any immediate savings. Avoid overspending and falling into unnecessary debt by planning your purchases and ignoring store credit card offers.
If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR into 2023! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read The Ascent's full review for free and apply in just 2 minutes.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.