How Department Store Credit Cards Get You In The End

It is tempting to get a department store credit card whenever you are offered one by the cashier at the place where you are making a purchase. This temptation is due in part to the fact that these cashiers tend to be aggressive in pushing the department store credit card. It’s also due to the fact that the department store credit card almost always offers an immediate percentage-off savings at the time of application. And it’s tempting just because we like to have more credit so that we can spend more money. But the short-term benefits of the department store credit card may not outweigh the long-term problems that the department store credit card can cause for you.

The most obvious problem that may be caused by department store credit cards is that they let you acquire more debt. The department store credit card adds another card that you can use when you get in that impulsive shopping mood. This means that it frees up more loan money than you already had available which means that you can get yourself into more trouble with excessive debt than if you had just used a credit card that you already had to make the purchase. Additionally, the department store credit card tends to have a higher interest rate and higher transaction fees than those of standard credit cards which means that you’re paying more in the long run for incurring that debt on a department store credit card than you would pay if you used a normal credit card to make the same purchase. This mitigates the savings that you get at the time of purchase and can cause you to lose money overall.

In addition to the financial problems caused by department store credit cards, you should know that these credit cards can cause damage to your credit report. Part of this is caused simply by the fact that you’ll be incurring that additional debt – and that you have yet another card that you may make late payments on. However, it’s also caused simply by filing the application to get the credit card in the first place. Every credit card application that you make causes a small hit to your credit score. This type of credit card application causes a small drop in your credit score that only lasts about six months but it also shows up as a mark on your credit report that can remain on the report for up to two years.

Department store credit cards offer some benefits. For example, they are easier to get than normal credit cards and are sometimes the only option for starting to establish credit when you don’t have any yet. But there are major drawbacks to the department store credit card including the high percentage rates, the fact that they allow you to incur more debt, their limited use at only one store and the impact that they have on your credit score just based on the fact that you’ve applied for them. These drawbacks make it so that the department store credit card bites you in the end despite the early benefits.