Most retailers, including online sellers and department stores, have their own version of a store-branded credit card. You’ve probably been offered one in exchange for a discount off your purchase at some point.

Even though retailers often try to lure customers with savings at the register, store credit cards aren’t always the best choice when compared to a traditional credit card. Find out when a store credit card isn’t worth it. Remember: for more tips on how to improve the quality of your life, visit www.credithealing.org.

1. Higher Interest

The interest rates on store credit cards are often higher than those on traditional credit cards that can be used anywhere. According to a recent survey, the average APR for retail cards is five points higher than that of traditional cards. You’ll pay more on your purchases over time if you don’t pay off your card balance in full every month.

Before you sign up for a store credit card, compare the APR to the rates you pay on the cards already in your wallet (if you don’t have a traditional credit card, you might want to consider a secured credit card or a student credit card first).

2. Skimpy Rewards

Retailers typically pair their credit cards with a rewards program that offers in-store discounts or earns points toward future purchases. But unless you always shop at the retailer in question, these perks may not be as valuable as you think. Credit cards with rewards such as cash back and travel points can be used anywhere, and typically earn points on all purchases, making them more versatile.

3. Card Lockdown

Most store credit cards are tied to a single retailer or corporate family of stores. You may find that a card that you can use anywhere is more convenient and offers more value (some store credit cards, such as those offered by Costco and Amazon, can be used anywhere).

4. Low Credit Limits

Store-branded credit cards have lower credit limits than traditional credit cards, which could hurt your credit score if you carry a balance. By using too much of your available balance, you will push your credit utilization ratio beyond the recommended level, which will lower your credit score.

In Closing

Keeping credit cards on hand has a few benefits. They can provide some value to you if you truly shop at the retailer a lot (especially if you pay off your balance each month). Additionally, they can be easier to obtain with less stringent credit requirements.

If you have limited credit and are interested in a store credit card, make sure to evaluate all your options. There are also student credit cards available for college students and secured credit cards for those with poor credit or limited credit.

To save money on your purchase, retailers want you to sign up for a credit card at the register. It’s all about getting you back into the store so you can spend more money and earn rewards. However, getting a credit card should be a more deliberate decision than to save 10% on jeans. Make sure you do your homework before applying for a store credit card.

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