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Consider Whether Store Credit Cards Are Really Beneficial

by Jim ONeil on July 11, 2011

in credit cards

Consumers usually think carefully prior to taking a large loan for a home or car. However, many do not blink an eye about charging on credit cards. Store account cards are perhaps the most dangerous form of credit.

Consumers use them to make purchases at the designated store, take home their goods, and pay for these later.

Interest rates on these cards are usually higher than for regular credit cards. If balances are not repaid quickly, the price tag of the purchase escalates. While loyalty cards accumulate points for purchases that translate to rewards, store cards are used to make the actual purchase.

People often open store accounts to improve their credit rating so they can secure loans bank offered in the future.

Many people feel more comfortable carrying a store credit card than toting around cash. If they need to make a large purchase, they use the card and pay off the balance over several months. Some store cards may be used at various chain stores falling under the same ownership umbrella.

This may allow the cardholder to purchase house wares, sporting goods, clothing, and jewelry using one card.

Issuers of store cards rarely publicize their high interest rates up front. Hidden costs like club membership or lost card protection fees may be built into the account. If the minimum amount due is not paid each month, interest is charged on the balance, leading some consumers to be charged interest on their interest, which can result in huge debt.

To avoid landing in a situation that requires them to consolidate balances using a credit management service, consumers should manage store cards wisely. They should learn about the interest rate, additional fees, and other terms and conditions prior to applying for a store account.

When an interest-free period is offered, consumers should take advantage of it and repay the balance within this timeframe.


Do not be late on a payment. Even if it's not the full amount.

Sergeant Vince Carter, USMC

You must not have been using store cards the last ten years if you haven't noticed the changes. There have been big improvements and educated people appreciate it.

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