{"id":83892,"date":"2011-05-16T04:00:36","date_gmt":"2011-05-16T11:00:36","guid":{"rendered":"http:\/\/getrichslowly.org\/blog\/?p=83892"},"modified":"2019-11-07T20:39:04","modified_gmt":"2019-11-08T04:39:04","slug":"danger-store-credit-cards","status":"publish","type":"post","link":"https:\/\/www.getrichslowly.org\/danger-store-credit-cards\/","title":{"rendered":"The dangers of store credit cards (and how I got suckered into opening a store credit card)"},"content":{"rendered":"

When I was a freshman in college, I did two very bad things (ahem<\/i> \u2014 two bad things related to personal finance).<\/p>\n

<\/span>Bad Thing #1<\/span><\/h2>\n

First, I opened a VISA credit card. There was a guy at a booth on campus, and being too naive and timid to tell him to buzz off, I stopped and listened to his pitch. Next thing I knew I was filling out an application. \"\"<\/a>At 18 years old, with no job, steady income, or credit history, I now had a $1,000 credit line. I maxed it out in less than three months and was shocked when the bill arrived.<\/p>\n

Luckily, I was about to start a part-time job, so I was comforted in knowing I could handle this predicament myself. I paid down the balance \u2014 but then charged it up again. This cycle went on for years. I always paid more than the minimum, but never fully paid off the debt.<\/p>\n

<\/span>Bad Thing #2<\/span><\/h2>\n

The second very bad thing I did was open a store credit card with a major retailer. I was about to pay for my purchase (with the aforementioned VISA, of course), and the salesperson told me I could save money and receive special offers and free items just for signing up for a card. I demurred, but she was persistent. “You can pay it off as soon as you get home and still get the coupons and discounts,” she said. “That’s what I do.”<\/p>\n

Unfortunately, it didn’t work out that way for me. I forgot I’d opened the card, somehow missed the first bill, and then was late with my payment. I was almost three months<\/i> delinquent before I paid off the card, and I got a mark on my credit report, all for a small balance I could have easily covered with money in my bank account.<\/p>\n

<\/span>The Cost of Store Credit Cards<\/span><\/h2>\n

Cashiers are often required to ask customers to sign up for store credit, and some stores require them to meet a quota for new card sign-ups. But these days, I politely tell the cashier, “I don’t carry store credit cards.” If they persist, I repeat myself. “Don’t you want to save 10%?” No thank you, I’d rather not.<\/p>\n

A recent study from New York Representative Anthony Weiner’s office provides even more reason to avoid store branded cards. The study found that 35 major New York City stores had an average interest rate of 23.83% on store cards (the national average APR for a regular credit card is 14.78%). <\/strong>Which stores offered the worst rates?<\/p>\n