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4 Times You Should Never Open a Store Credit Card—and 3 Times You Should

Resist that temptation to open a store credit card during the holidays. We've asked credit experts to explain when you should say "no"—and when you can say "yes."

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No: You’re not sure about the interest rate

Typically, the interest rates of store credit cards are higher than those of other credit cards. According to a 2019 landscape report by Wallethub, store credit cards have an interest rate that is 7.16% higher on average than secured credit cards’ (like Mastercard and Visa).

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No: You’ve already got a handful of cards

Natasha Rachel Smith, personal finance expert at topcashback.com, based in Montclair, New Jersey, says your credit score is determined by the number of credit cards open, credit utilization, how long you’ve had cards open, and how many credit applications have taken place during a short period of time. “New credit card inquiries remain on your credit report for two years, and applying for too many at the same time can dent your score,” explains Smith. “While it is a known factor that when borrowing money your interest rate is dependent on your credit score, store credit cards charge exorbitant interest rates regardless of how wonderful your creditworthiness is. Shoppers with great credit scores are still subjected to eye-watering interest rates well above 20 percent.” Learn more about how to keep your credit score high.

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No: You haven’t shopped for a lower-interest credit card

Brian Karimzad, VP of research at comparecards.com by LendingTree, who is based in New York, suggests consumers should get financing before heading to the stores. “Shop around for a zero percent deal before you go shopping if you must finance your purchases,” he advises. “Zero percent deals on bank-branded cards you get online or in the bank branch rarely have deferred interest clauses, so they are true zero percent deals that won’t charge you interest for the full promotional period, even if you don’t pay the balance in full.”

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No: You can’t afford what’s on the counter

If you’re not a disciplined shopper, you might actually end up spending more than you anticipated with store credit cards, says Smith. And if you’re tempted to get the card to cover your extra purchases, it’s time to say no.

“For example, when you are accepted for retail cards, you could believe you’re getting an additional percentage taken off so [you] have more money to play with. This old trick encourages many people to spend frivolously, which is exactly how the store wants you to behave. The more uncontrolled your attitude is about money, the more profit it will make,” she says. It’s just one of the many sneaky ways stores get you to spend more money.

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Yes: The perks include discounts and special sales

If you can keep a handle on your shopping and spending, some store credit cards do offer benefits, like sales and point-of-purchase discounts. “One of the biggest benefits to a retail card is the exclusive sales and discounts you may receive during the course of being an account holder, if applicable with that store,” continues Smith. “While that’s a simple marketing ploy to get you to spend more money, you might not receive these discounts if you didn’t have the store card. If you’re a disciplined shopper and can avoid overspending along with always paying your balance off in full, you’ll be rubbing your hands with glee over the extra savings you might get on items you would’ve bought anyway.” Here are some tips from psychology experts on spending less when you’re shopping.

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Yes: You can earn rewards

Another benefit store credit cards may offer is a rewards program that lets you earn points every time you buy something from the store. “Rewards are often in the form of credits toward future purchases,” says Philadelphia-based personal finance expert Janet Alvarez of Wise Bread, a personal finance site. “The best store cards offer rewards or discounts of up to 5 percent of the amount spent.”

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Yes: Amazon’s credit card

If you are a Prime member, opening an Amazon credit card might be very beneficial due to their rewards targeting members and special financing offers, advises Smith. “Amazon’s credit card is fairly new and comes with great promotions. Plus, it gives members a chance to earn and save more money,” she says. “However, the APR is fairly high and this credit card should only be opened for people who can afford to pay off their credit card bill in full every month to take advantage of the discount benefits.” Store credit cards are not for everyone, so be wary of the hidden fees and interest rates before you open one. Spend wisely, and only open the credit accounts that are right for you.

Erica Lamberg
Erica Lamberg is an experienced travel and business writer based in suburban Philadelphia. Specializing in family travel, cruise experiences, and tips for enriching and affordable vacations. Beyond travel, Erica writes about personal finance, health and parenting topics. Her writing credits include Reader’s Digest, USA Today, Parents Magazine, Oprah Magazine and U.S. News & World Report. Her favorite city is Paris and she dreams about visiting Greece and Israel. She is a graduate of the University of Maryland at College Park and is married with two children.