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With credit card giants slashing credit and closing down accounts, turning to a store credit card is a tempting idea. But with potential negatives on finance charges and high rates, don’t jump in without knowing the facts first.

First, store credit cards are at the front of the line for those that demand you read the fine print. Sure, reading the fine print is a staple of all credit card “tips” articles, but there’s a good reason for that, especially with store credit cards. While the cards may promise “0% interest for a full year”, don’t get too comfortable. In fact, retailers are counting on your comfort. So, secret number one with store credit cards is the way stores charge you for purchases if you’re late on your card payments.

For example, if you buy a leather recliner and miss paying the full balance before the termination period, hold on to your hat. The retailer will charge you the full interest dating back to the original purchase date, and most likely at a rate near 10% or even 20%.

That’s another big problem with store credit cards is that they often have interest rates significantly higher than traditional credit cards. One study posts average store card rates at 20%, while average credit card rates clock in at about 14%.

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Then there’s the potential damage to your credit score. Credit scoring agencies invariably ding you for having too many open credit card accounts, even if you’ve been diligent about paying the bill. So that said, it’s better to pay cash, or even use a regular credit card, than to open a store credit card and risk having your credit negatively impacted.

In addition, store credit card users are vulnerable to having their names placed on mega-marketing databases, possibly triggering an avalanche of unwanted direct mail or relentless emails from other companies touting their products and services.

Some cards have their benefits though. If you’re recovering from adverse financial circumstances, a store credit card, which is easier to get than a regular credit card, can help you rebuild your credit. Some cards even have their “rewards” programs, although they’re usually limited to items at the respective retailer.

For the diligent, the disciplined and the extremely loyal, a retail store card can work out just fine. But if you’re late paying or open up too many store cards, you could be sending an open invitation to more trouble than you counted on. And these days, who needs that?

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