Be cautious of store credit cards

Pile of credit cards

Now that it is the holiday season, many people are looking to save money on their holiday purchases. Many stores offer store credit cards, and you may be offered one as you shop or at the checkout. As part of the offer, you may receive a discount on your purchases that day. However, there are many drawbacks to store credit cards so think carefully before you apply for one.

Most store credit cards cannot be used at other stores, leaving you limited on where you can use it. Store credit cards also usually have higher interest rates than traditional credit cards, so your purchases can become pricey if you don’t pay your credit card off in full every month. As with all credit cards, it is ideal not to carry a balance month to month.

The other risk of store credit cards is the temptation to get multiple store credit cards from different retailers. Having more credit cards may make it more difficult to keep track of your bills, leaving you at risk of missing a bill payment. Additionally, if you apply for multiple credit cards in a short period of time, the credit checks required to get the cards will have a negative impact on your credit rating.

Instead of using store credit cards, it may be a better strategy to get one or two credit cards that offer rewards that interest you, such as cash back or travel rewards. By using the same one or two credit cards for most of your purchases, your rewards will build up faster. Remember that it is best to pay your credit card off every month: if you don’t have the cash for it, don’t make the purchase. Any rewards you receive from your credit cards will be quickly offset by the amount of interest you are paying if you don’t pay your card off monthly.