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Store Credit Card Suck – Here’s 5 Reasons Why

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Deciding between two bad store credit cards

Every year, holiday shoppers descend on the malls in order to fulfill their list of gifts. And with each store they visit, shoppers are inevitably offered the opportunity to earn a nominal discount in return for opening a new revolving charge account with the store’s co-branded credit card. But while those instant savings can seem attractive, here are five reasons why shoppers should avoid store credit cards:

1.       Poor interest rates. These products offer very poor interest rates compared with standard credit cards. While most competitive standard credit cards will offer the most qualified applicants interest rates of between 10%-20%, the average store credit card offer rates of 20% – 30% – many times double the typical rate.

2.       No balance transfer offers. Standard credit cards frequently come with a 0% APR promotional financing offer on new purchases, balance transfers, or both. Some store cards may offer promotional financing on new, in-store purchases, but this is inferior to the more generous offers seen with standard credit cards which offer 0% rates for up to 18 months. (Learn more about money saving 0% APR offers here.)

3.       Store cards may only be good at one merchant. The big reason these cards are so heavily promoted is that they are tool for increasing brand loyalty. When a card can only be used at one store, it is not only less useful, but it may encourage customers to pass up better deals at competing retailers.

4.       Poor sign-up bonuses. Every time cardholders apply for a new store credit card, they are giving up the chance to leverage their good credit for an outstanding sign-up bonus. For example, 10% off of a purchase at Macy’s or Kohl’s will equal only $100 in savings on a $1,000 purchase. In contrast, the Chase Sapphire Preferred card currently offers 40,000 Ultimate Rewards points for making $3,000 worth of purchases within three months. These points are worth $400 in statement credits or $500 towards any travel purchase.

5.       Too many bills. It may be possible to apply for a store card at every place you shop, but do shoppers really want to find their mailbox stuffed with bills each day? And with each new bill comes the hassle of payment and the increasingly likely prospect of incurring interest and late fees if a mistake is made.

Ultimately, shoppers should be extremely cautious when offered a discount just for opening up a new account. In most cases, the deal is never as good as it may seem and in nearly all cases, there is usually a major credit card with better interest rates, larger sign up bonuses, and better rewards.

Editor's Note: This content is not provided by Citi. Any opinions, analyses, reviews or recommendations expressed here are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by the Citi or any of the other companies whose products are featured in this content.

About the author

Jason Steele

Jason Steele is a freelance journalist specializing in personal finance and travel and is recognized as an expert in credit cards. He is a regular contributor to many of the top personal finance sites such as Wise Bread and Money Talks News. His work has been frequently carried on mainstream news outlets such as MSN Money, Yahoo, Finance, and Business insider.

Jason lives in Denver Colorado with his wife and two daughters.

– has written 430 posts.

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