Store Cards Are a Bad Deal. Here's Why I Opened One Anyway

by Christy Bieber | Updated July 21, 2021 - First published on April 13, 2021

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A man and woman walking around a furniture store and looking at a tablet held out by a saleswoman.

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Sometimes, a choice that seems like a bad financial decision really isn't.

Many retail stores offer their own branded credit cards. These cards are generally not a good type of credit card to apply for.

Depending on the card, you may only be able to use store cards in the store that issued them. They tend to have very high interest rates, even compared to other credit cards that charge a lot in interest. And the rewards they offer (if they offer them at all) are usually not as generous as those of the best rewards credit cards. Sometimes, the rewards even cause you to spend more money to use them, such as when the card offers discounts off future purchases.

Despite all these big downsides, I actually opened a store credit card recently. Here's why.

Opening a store card made sense for these reasons

The biggest reason I opted to open a store credit card was that I was making a large purchase at the store and I got 10% off on my purchase for opening a card. That provided me with a whole lot of savings.

Stores commonly offer this type of discount to entice you into opening a card. Unfortunately, in many cases it's still not worth taking them up on the offer. That's because you only get the discount once -- but the high interest rate lasts the entire time you have the card. If you don't pay off the card in full, the interest you pay can cost far more than what you saved by getting the upfront discount.

Opening a store card can also affect your credit score by reducing the average age of your credit and leaving you with an inquiry on your report. A lower score can make other borrowing more expensive in the future.

However, these two downsides don't really affect me right now -- which is why I felt OK about opening this particular card.

See, my credit score is really good already. And I haven't opened a new card in a very long time, so opening the store card isn't likely to have a big impact on my future ability to borrow. I can afford to temporarily knock my score down a few points to get the store card's discount -- especially since I don't plan to take out a new mortgage, car loan, or other major debts in the coming years.

Plus, I was 100% confident I'd pay off the purchase in full before I'd owe any interest. I never carry a balance on my credit cards in general, and I know for sure I'll never end up carrying a balance on this store card in the future. As a result, the high interest rate won't affect me -- so there's no way I'll end up paying so much interest that it negates the value of that 10% I saved on my purchase.

Now, opening a store card to get a discount definitely isn't something I'd do every day. In fact, if I did it too often, eventually it would impact my credit score more than I'm comfortable with. And I might risk owing interest if I ended up with too many cards to manage and accidentally missed a payment. But since this was the first time in years I've done it and the purchase was an especially large one, the choice paid off.

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