Are store credit cards worth the hassle?
The only thing worse than being hassled to sign up for a store credit card is when the person in front of you faces a similar proposition.
You’re thinking, No way does this moron, carrying 50 items no less, go through the motions while eight other customers wait in line. And no way does the store clerk let this happen.
Of course, it does, and much more often than you might think. Chances are, you might’ve even thought it a good idea to sign up for a store credit card once upon a time; there might be one in your wallet right now. But, are store credit cards worth it?
The immediate payoffs are great, sure. If you’ve got a big wad of stuff in your hand at the register, the promise of 10 or 15 per cent off your first purchase – what many retailers promise – is an enticing incentive.
And going forward, getting rewards for shopping isn’t bad either. The Canadian Tire Options MasterCard, for example, gives you Canadian Tire money cash back no matter where you shop, Canadian Tire or not. To a family of four or five, that can go a long way.
Yet what about the nasty back-end of store credit cards, which is discussed even less than the detriments of regular credit cards?
As Forbes.com pointed out today, signing up for a store-branded credit card is “generally not in your best interest,” due to interest rate penalties even higher than traditional bank CCs.
That Canadian Tire credit card, it should be noted, comes with an attached interest rate of 26 per cent, and that may be on the low end of things. The Sears Canada card charges 28.8 per cent annually, as does Canada’s Home Depot card, and on down the line.
Worse still, Forbes says that – contrary to popular belief – opening up store credit cards can actually hurt your credit rating, not help it. Since the cards often have such low credit limits, the news site writes, opening up too many of them will reduce the average life of all your credit accounts.
Retailers have actually come under fire for their credit card promotions, too, which some contend are unethical.
“Store credit card issuers as a whole have taken flak … over the past couple of years because of the way they instantaneously approve consumers at the register, rather than truly evaluating their credit and the likelihood that they will be able to pay back their debt,” notes Forbes.
Now, none of these warning signs would be a problem if people just paid the balance off on their store credit cards in time, though that doesn’t really happen with any credit card too often, does it?
In your experience, are store credit cards worth the rewards they promise, or are the interest rates too high to handle?
By Jason Buckland, MSN Money
Posted by: LISETTE DESGAGNE | Nov 4, 2021 8:19:55 PM
No; absolutely not. It does NOT increase your credit score. In fact it diminishes it. As a point in fact I had a card with President Choice for many years and paid it regularly every month. It became expired in August 2010 and I noticed the fact and asked for a new card in September following. I was denied because of "bad credit" rating I had. Little did they know that I had a fight with Capital One because these had charged me with late payment penalty as they had lowered my limit without telling me and so fell short of paying the right amount. This happened twice at which time I got really angry and requested that they withdraw their penalty fee only to receive a note from a collection agency telling me I owe money to Capital One. Now faced with this new refusal from President Choice (which I paid very regularly I repeat) I ordered my credit profile only to find out that "Yes" those 2 credit cards were my only black spots on my life.
Nevertheless if you go anywhere on this planet you cannot rent or do anything if you do not own a credit card. If you say that you will pay "cash" they suspect you of wrong.
So what is there to do? I hope I have the right answer: use your credit card once in a while...pay it in full to keep it current and hope those big machines will not deny you the "grace" of having their card in your wallet while they still charge you fees from where...I don't know.
Sorry I am bitter but all aware of the trap.
Lisette
Posted by: don | Nov 5, 2021 10:28:08 AM
No it doesnt. In spite of best intentions how many actually pay off these cards each month ? This is what they count on and with the interest rates they charge it is easy for people to get into trouble and for these companies to make lots of money on interest Better off not to, even for the savings if you sign up. I dont have any of these cards as I refuse to pay
that kind of interest and there is nothing they can sell me that I cant use my bank issued credit card to purchase. I have 1 that carries no balance and one that carries a small balance but the interst rate on both are under 8%. If the bank wont lend you the money or give you a lower rate card then you really cant afford the purchase anyway. You also need to careful of the "instant" cards offered when you purchase as I know people who become victims of theft by people opening these types of accounts in their name. A retailer doesnt always do proper checks before granting credit.
One person I know fought for 3 months because someone opened and account in this name, charged three thousand dollars and the store did not even want to look into it. Told him you purchased it you just dont want to pay. It was finally straightend out but not without a royal run around and months of phone calls and being transfered from one person to the next.
Posted by: Josh | Nov 5, 2021 12:24:42 PM
It depends on the "perks" that they offer for signing up. I know some companies that give you 10% off of your purchases that day. If I'm making a large purchase, then I'll sign up for the credit card to get the 10% off, pay it off right away (I only make large purchases that I can pay off right away) and then cancel the card ASAP. In that case there's no harm. If there's even a chance that you'll leave a balance on the card then the interest will eat up that 10% savings pretty quickly.
Posted by: Grouchy | Nov 11, 2021 11:13:09 AM
At an average of 29% there is no way I would have a store card. Thats just usury.