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Are you holiday shopping with store credit cards?

November 2, 2022
min read

Holiday shopping doesn’t have to be stressful. Use these tips to help!

Store Branded Credit Cards

Now that it is the holiday season, many of us are looking for ways to cut down on our spending. Many stores offer store credit cards to help people save money on their purchases, or offer additional points in the store’s reward program. You may be offered one as you shop or at the checkout. As an incentive, many stores offer an immediate discount on purchases to entice people to sign up for a credit card. However, store credit cards have drawbacks, so think carefully before applying for one.

Risks of Store Cards

Store credit cards usually have higher interest rates than traditional ones, so your purchases can become pricey if you don’t pay your credit card in full every month. As with all credit cards, it is ideal not to carry a monthly balance.

Another risk of store credit cards is the temptation to get multiple cards from different retailers. Having more credit cards may make it 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 time, the credit checks required to get the cards will negatively impact 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 cashback 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 interest you pay if you don’t pay your card off monthly.

Store credit cards often have low credit limits and additional fees. It’s important to read the contract carefully so that you understand how much you can be charged if you miss a payment or if you don’t make the full minimum payment. It’s important to keep your outstanding credit card balance at or below 30% of the credit limit. So, if your credit card limit is only $2,000, this could affect your credit score.

How to Maximize your Holiday Spending

If you still want to stay on budget and save some money without the risk of a store credit card, here are some tips that can help you manage your debt and spending over the holiday season.

Set a Budget

Create a spreadsheet so you can track your spending and keep a list. Make sure you know what you want before going into the store so that you’re not spending over budget or distracted.

Save Money

If you like to spend over the holidays, make a plan to put a little money aside all year. If you save some money every month, you can avoid stress and have the cash to pay off your credit card right away.  To make it easy, you can set up an automatic transfer of a set amount every payday from your chequing account into a savings account.

Look For Discounts

If you make your shopping list early, you’ll know exactly what you want so that you can spot discounts. You won’t need a store credit card to get a discount on your purchase if you buy it when it’s on sale. A great way to catch sales is to sign up for store newsletters and emails.

If you’re considering opening an account with a store credit card, ensure you read the fine print and that you’re aware of the risks. Apply for the credit card that works best for you.

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*All rates and yields subject to change without notice.
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