While you are out shopping, you will likely receive some tantalizing store credit card offers. Store employees are often incentivized to open credit accounts, therefore they will persist in their endeavor until they hand you the receipt for your purchase.
Some of the tactics include 10 to 15 percent off your current purchase, an entire year interest-free, reward points, early notification of sales, and access to members-only exclusive events. So the question is, if store credit cards offer so many benefits, why do they carry such a negative stigma?
- Inquiries have a temporary negative impact on credit. If you are trying to build your credit or need it in pristine condition for an upcoming large purchase, then you should definitely stay away from opening any credit cards.
- Their terms are not always clear. Store credit cards are notorious for piling on interest from purchases made during the introductory period if the balance is not paid in full prior to the end of that period.
Let’s say that you opened a store credit card with 0% APR for the first 12 months, and proceeded to spend $1,000 on a new wardrobe. If you have any balance remaining after the 12-month period, the credit card will apply their high interest rate to the original $1,000 purchase. This tactic often blindsides unsuspecting consumers, who instead of saving, end up paying more for their original purchase.
- Sometimes sales associates are not transparent regarding the terms. Some store credit cards do genuinely offer fantastic reward programs, however, you should make sure to review the terms and conditions which might outweigh the benefits.
- They encourage going over your budget. With high credit limits, irresistible offers, and frequent sale notifications, it’s much more difficult to break the spending cycle, particularly for those who are shopaholics.
Ultimately, you have control over your credit and finances. Store credit cards are not the enemy when used wisely and sparingly. If you feel that your debt has spiraled out of control, we recommend that you contact our office right away to speak with an experienced West Palm Beach bankruptcy attorney, and learn more about your options.