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Q: "I’m heading out to the malls this weekend and I have just one question. Should I go for those “in-store” credit card offers? My sister nabbed one last week and she won’t stop talking about it. Should I take advantage?" – D.T. San Diego, Calif.

A: We salute your courage for hitting the stores this holiday weekend – just wear some body armor and have a good time.

As for the store credit cards, our advice is to avoid them. In general, you get better rate terms from the major credit card carriers and the extra cards you rack up at your mall can actually cripple your credit score.

But wait a minute; we’re getting ahead of your question.

Let’s start with your trip to the mall. Chances are, every time you approach the checkout counter you’ll be asked – maybe “hounded” is a better term – to open a store credit card. Most stores offer immediate discounts on your purchases and the better counter reps will put a dollar sign on that offer, telling you that with a new store card your $115 purchase becomes an $80 or $90 purchase.

That’s pretty tempting. After all, it’s a rough-and-tumble economy and saving 20% or so on your store purchase sounds like a good deal at first glance.

When your mind starts spinning that way, it’s time to step away from the checkout counter. Here are three good reasons why:

Lousy numbers

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Retail credit cards are infamous for offering low credit limits and high interest rates. Store cards resemble sub-prime mortgages in that regard. You wouldn’t want a sub-prime piece of plastic, so why take a store card with similar features?

Your credit will suffer

The problem with store credit cards and low credit limits is a calculation that credit rating agencies call "credit utilization”. That means the amount of credit you’ve used up on your card and the amount of credit you have left. It’s easy to rack up a quick $600 on a $1,000 store credit card. But that represents a credit utilization rate of 60% - way higher than creditors like to see. If you use a major credit card, on the other hand, that has a $10,000 credit limit, $600 is going to leave you easily under the 30% credit utilization rate that most creditors consider safe.

Store cards limit your shopping choices

Store credit cards often charge interest rates of 20% or more, and pretty soon, if you use the card regularly, that will catch up to your budget limits. That leaves less cash to spend when you go shopping somewhere else, and that could lead to long-term budget and credit problems if you keep spending money at the malls anyway. All from a few store credit cards.

It’s also a matter of simplicity. If you carry just one, or maybe two major credit cards, you’re only getting one or two bills per month. But every time you open a store card, you’re also opening the door to more bills, more payments, and more chances for making a mistake and missing a payment.

In the end, store cards aren’t worth the hassle. Your best bet? Use your bank debit card. That way the cash comes right out of your bank account, and you won’t have to deal with high interest rates and potentially major credit report issues.

Hope that helps – and happy holidays.

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