What to Consider Before You Get a Store Credit Card

There’s no shortage of sales clerks practically begging you to sign up for their store’s credit card. They’ve gone from simply telling you that you’ll save 10% on your purchase, to giving you the actual dollar amount you’ll save. “Would you like to save $15.66 on your purchase today?” My answer is usually “Yes, but not if it means signing up for a credit card.”

Store credit cards may be good for some people but they aren’t for everyone. The next time you’re tempted to apply for a store credit card, consider these things.

Can you afford another credit card?

Saving a few dollars is great, but it isn’t a good enough reason to go into debt. If your current credit cards are maxed out or you’re already having trouble making your credit card payments, you probably don’t need to apply for a credit card at your favorite store.

Read the credit card disclosure.

While sales clerks are eager to get you to sign up for their credit card (they often get some type of reward for getting customers to get their credit card), they rarely hand you a copy of the credit card disclosure before running your application. The credit card disclosure is where you’ll find details about the credit card’s costs – interest rate, annual fee, late fee, etc. You should always read the credit card disclosure before you apply for a credit card.

Will you be approved?

Store credit cards are known for approving applications from consumers who can’t get a major credit card, aka people with bad credit or no credit. That doesn’t mean you’re guaranteed approval. Credit card companies are now required to include your income in the application process. If you don’t make enough money, your credit card application could be denied. You might also be denied if you have too many credit obligations, you have serious delinquencies on your credit report, or if you’ve applied for too many credit cards in the recent past.

Can you use the credit card anywhere else?

One of the biggest drawbacks of store credit cards is that you can only use them in a single store or chain of stores. If you don’t shop in that store regularly, having a credit card may not benefit you. It’s just another credit card in your wallet. Some store credit cards have a Visa or MasterCard logo, which allows them to be used everywhere credit cards are accepted. These credit cards are more versatile.

Do you have too many credit cards already?

There’s no set number of credit cards that every person should have. It all depends on your specific financial situation. Think about the credit cards you already have. If you have several, applying for another one probably isn’t a good idea. You can better handle another credit card if you only have one or two so far.

If you need a credit card to build or rebuild your credit and can’t get one anywhere else, it might be worth it to apply for a secured credit card. Otherwise, you should shy away from these limited-use credit cards.