Billeater: Debunking Store Credit Card Myths


How many times have you been asked, “Would you like to save 10% on your purchase today by opening a credit account?” The offer can be enticing, but you have probably heard have heard a few things about store credit cards that make you want to shy away.

Here are some common myths and the real truth about store credit cards. Myth #1: Store Cards Hurt Your Credit

Having a good credit history is necessary to modern survival, one would think it is easy to get a credit card. However, many people have trouble qualifying for their first card. In a tough economy, it is becoming harder to get credit cards from a bank because without a credit history. This is where consumer store credit cards can actually help you. It is very easy to qualify for store credit cards from stores like Kohl’s, Target, Victoria’s Secret and Marshall’s. Just make sure you don’t open all four of those at once and choose the card wisely!

Myth #2: Store Cards Can Save a Ton of Money

Some store credit cards offer superb rewards programs, but in most cases, they end up costing more. Research which stores offer the best rewards programs that you will use the most often before choosing. Read the fine print. Many stores only provide a 10% discount off the first purchase. Look for the highest level of rewards for the least commitment and don’t pay an annual fee.

When it comes to cards offering interest-free periods, be careful to pay off within the promotional period or you end up paying high store-card interest on those purchases. Also understand that the interest-free promotions are often paid back to you as a credit on the account only after you pay the interest up front. So really, you’re getting store credit, not cash.

Myth #3: Store Cards are Less Dangerous Because They Have Lower Limits

Yes, store credit cards usually have low spending limits. But the interest rates can exceed 20%. If you fail to pay off the bill in full every month, those sky-high interest rates can be deadly for your financial health. Even saving a bundle on a purchase won’t help if you carry a balance on such cards. The high interest rate can end up costing double the product’s retail cost.

Myth #4: Opening a Store Credit Card Will Hurt My Credit Score

This is a rumor reported widely on the web, but opening a single store credit card will not hurt your score. It’s when you close an account or start opening too many accounts at several retailers that you run into trouble. Opening too many accounts at small retailers may make you look irresponsible on paper. Closing accounts reduces your total available credit, a figure that has a positive influence on your report. You are much better off choosing one card from a retailer you use frequently until your score is high enough to qualify for a Mastercard or Visa. Then leave the store account open but don’t use it.

Still not sure if that Banana Republic credit card is a good idea? Check out The Digerati Life’s recent post on retail credit card pros and cons.

Do you have any store credit cards?  Which ones and why?

Jessica Bosari writes for the money-saving site, The site is devoted to helping people reduce expenses, save money and find great deals. Pay Billeater a visit for more money-saving tips!

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  1. ReggieMasterson

    5 years ago

    I personally shun store credit cards – they just aren’t worth it for me. Like you mentioned, they don’t save you much money and they can hurt your credit score, especially when you have more than one. Perhaps it’s good that it’s getting harder to get a credit card: only 58% of Generation Y’ers (born between 1980-2000) pay their monthly bills on time.

    Source cited:


    5 years ago

    I think store cards can be helpful, but only if you are VERY careful. I’m not going to even apply unless I have a purchase for several hundred dollars where 10% off actually means something. But I rarely spend that much in one shopping trip. I guess that’s why I don’t currently have any store cards…


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