This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Why You Shouldn't Open a Store Credit Card

3. Traditional cards may offer more substantial rewards.

Sure, you're getting a discount with a store card, but you're forgoing the points you would be getting if you charged your purchase to a lucrative traditional card that offers travel points or cash back, Kelly says.

"Yes, you're saving $40, but you're losing the American Express  (AXP) or Chase  (JPM) points that might help you get a free trip that would be worth way more than that discount," he explains.

Free gift certificates throughout the year may be another item stores offer to sweeten the deal of their branded credit cards, but the savings won't often be much more than 20% to 30% at any point, Kelly says.

If you're still having trouble knowing exactly which rewards are better for your buying habits and lifestyle, Odysseas Papadimitriou, founder and CEO of Evolution Finance, the parent company of CardHub.com, says it's best to use a cash comparison.

"It's very had to compare miles with points, etc. so the best option is to convert everything to cash and then see what's going to offer the most bang for your buck," Papadimitriou says.

4. Many store cards have deferred interest.

What it often comes down to is that the short-term discount that you would get from opening a card is not worth the high interest -- often exceeding 24%, Albery says. Many store cards that appear to offer zero-percent interest actually offer "deferred" interest -- so if you miss a payment or you can't pay your purchases off in full, those interest rates kick in.

"Even if you miss a payment by a couple of days, they go back and assess your interest rate as if they never gave you that zero-percent rate," Papadimitriou says. "So even if you have paid $480 towards a $500 TV, they will go back and charge you interest on the full $500 purchase."

Although deferred interest isn't unique to store credit cards, it is more common, Papadimitriou says, adding that the zero-percent offers are often used as a way to "get consumers on the hook."

5. Store credit cards are easier to get and reward regular customers.

"At the end of the day, store credit cards are easier to get than the premium travel cards, so they may be a good option for people looking to build credit," Kelly says.

Because a store credit card counts as a different line of credit on your credit report, people just building credit can benefit from having different lines of credit available to them.

Also, if you're a frequent shopper, some cards may be just what you're looking for.

"If you shop at Target  (TGT) frequently, for example, their card gives 5% off virtually every purchase plus makes a charitable donation to the school of your choice," Detweiler says. "I can't think of another card that gives 5% cash back on every purchase."

Additionally, the Kohl's card may also be a good deal for frequent shoppers, Kelly says. Once you spend $600, you'll be eligible for 18 different deals and discounts throughout the year.

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,390.13 +194.71 1.13%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,630.0810 +63.9430 1.40%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs