I'm not too impressed with store credit cards. For me, they're mostly a hassle and simply take me away from my goal of maximizing my cash back on the two major credit cards I use. And after reading about NCN's experience with store cards, I'm even more leery of them. Here's what a clerk told him that store managers say about store credit cards:
“They tell us if we can get someone to sign up, and be approved, that we have guaranteed that that customer will shop at our store, on average, three times more often than they would have if they didn’t have a card with our store’s name on it.”
Not only that, but I'm guessing that the person will charge more, let the balance sit, and become more profitable as a credit card holder than as a regular customer.
You've been warned.
Like most things, it all comes down to discipline. In the past, I did not have discipline and I got store credit cards, and what that lady said about customers coming back over and over was true. Any discount I got was eaten up in fees and repeat purchases that may or may not have been needed.
However, debt free and a little wiser now, I'll apply for a store credit card where it makes sense. I went to get a power washer last month, and turns out I just missed a sale. However, I could get $50 off by getting a store card. So I did, got the bill Monday, and paid it off yesterday. I also called to cancel the card. That was amazingly easy. All automated and they will send a confirmation letter that the account is closed.
So - they can serve a purpose, but it is probably best to stay clear of them unless you are sure you will just use it that once and then cancel.
Posted by: CommRE | May 21, 2008 at 07:44 AM
Plus you're now in their system to receive mailings and to sell your personal information to other credit issuers.
Posted by: Ron@TheWisdomJournal | May 21, 2008 at 07:57 AM
I'm still guarding my credit for now because I may have to finance a nused car in the next couple of years. After that though, I intend to play their game for my own benefit. I get a kick out of taking maximum advantage of offers that I'm expected to slip up with. I like making cc companies give me more money from cash back than I gave them for interest. I like doing 0% balance transfers and putting the money in savings for a year than paying it off a month before I'd get charged interest. I'd have no problem getting store credit to have something in my posession WHILE I'm saving up for it and not paying a single cent in interest. Money off would just sweeten the deal. If inquiries and new lines of credit didn't screw up credit scores, I'd do it more often.
Posted by: Rzrshrp | May 21, 2008 at 08:23 AM
I'm confused by all these articles about store-card hate. It's the same as ANY credit card. If you're 17 with a shiny new platinum card, you're going to be irresponsible; the fact that it's a store card makes no difference. Nothing stated really says anything concrete that doesn't apply to other cards. I've also never been somewhere that didn't have you *write down* your information for them to type in, then hand you back your application when done processing. I've also worked many retail jobs, so I know what I speak of at least a little.
Because of some issues with College my credit isn't the greatest, and I always get declined for regular CC's with cash-back. Mind you, I already have two credit lines open in both my banks for overdraft protection and if I need to borrow money, so these CC's are purely for building credit.
I did however, qualify for a banana republic CC, which includes Gap and Old Navy as well. Between banana republic and old navy, I get 80% of my clothes shopping done. I will build up reward points on the card, pay the bill in 2-3 days when it shows up online, and be done. I don't see what the big deal is.
Posted by: t3ch | May 21, 2008 at 08:36 AM
t3ch --
It's not the same as any card to me -- you can use it at only one place, which is a MAJOR inconvenience.
Posted by: FMF | May 21, 2008 at 08:42 AM
I bought my wife a dress she wanted at Christmas at Macy's. They told me that if I signed up for their store card, I would get another 40% off. I signed up and they sent me a Macy's Visa card. I can use it anywhere which lead me to charge on it irresponsibly. I should have cut the card up when it arrived in the mail!
Posted by: DebtHater | May 21, 2008 at 09:00 AM
Re: Ron's comment - More junk mail and credit offers is no big deal. Just throw it out with all the rest...
Posted by: CommRE | May 21, 2008 at 09:08 AM
I always sign up for the card to get the discount, but then chop it up when it comes in the mail, or store it with the others I don't or stopped using.
I think I now have 6 store credit cards. I don't use them any more, but signing up for them saved me around $150. It's just gaming the system.
Posted by: Sam | May 21, 2008 at 09:17 AM
For major purchases (appliances, furniture), we'll consider a store credit card to get the additional discount. It gets used only that once, and closed after it's paid off.
I do keep one particular store credit card around - Victoria's Secret; they send me coupons and free offers in the mail. If not for the coupons, I'd probably shop there even less often, because it's so expensive... but I know I would still go there, because I can get in, buy exactly what I want, and get out, without the hassle of trying on a dozen new bras every single time.
Posted by: Anitra | May 21, 2008 at 10:07 AM
Not all store credit cards are specific for that store. Many have the visa/mastercard logo on them so you can use them anywhere. While I totally agree that when misused credit cards are bad there is a place for store credit cards. Assuming you pay it off every month, if you shop at one place often and the perk is better than the 1-1.5% you get back on your regular card you SHOULD do it. I see this being the same as FMF's plan to use 2 credit cards to maximize his cash back. If a store credit card allows you to do even better then why not?
Posted by: jeff s | May 21, 2008 at 10:10 AM
FMF-
Sure, it can only be used in one store, but as I said, I am just using it as a credit building tool. I shop there anyway, so what do I have to lose? I'm sure everyone has stores they frequent.
Really, my main question/point was, I don't see what the big deal is about store cards as long as you're using them responsibly (unless I'm missing something). Especially if you have a hard time getting a good regular credit card with cash back, as I do.
Posted by: t3ch | May 21, 2008 at 10:54 AM
I also had the same deal. When I purchased something from Macy's they said they would give me 15% off if I signed up for the Macy's card. I did sign up to get the discount and once the card arrived in the mail, I canceled the card.
Posted by: Financial Goal | May 21, 2008 at 11:12 AM
To add one more aspect to this conversation, I was the lady behind the sales counter telling you about the wonderful 15% off if you got the store card. If I didn't "sell" enough cards each month, I did not keep my job - the one I was working to get myself out of debt.
I felt like I was a drug dealer - "Here, let me help you get into debt." I tried to explain to each customer that they could open the card, charge their purchase, get the 15%, and pay off the card balance all in the same cash register transaction with me.
Posted by: NillaMo | May 21, 2008 at 12:19 PM
Many store cards also run through the same shady servicer, which does the best it can to make it hard to pay and easy to miss that you have a payment due. (I'm thinking of the company that services Ann Taylor here.) Yes, worse than regular credit cards.
Posted by: Sarah | May 21, 2008 at 12:22 PM
The only time I've had a store card was through Lowe's when I bought about $2,000 worth of wood, concrete, etc to build a privacy fence. We got 10% off at the time, which I thought was more that worth the hassle of keeping track of the bill and making sure it was paid off by the time the 0% interest ran out. I promptly canceled it after that.
Posted by: Kevin | May 21, 2008 at 12:34 PM
Why cancel the card? If there's no fee, it's much easier to just lock it in a drawer somewhere, unused; your FICO score is based partly on your ratio of debt to credit limit, so canceling the card can work against you in the short-term.
Posted by: Independent George | May 21, 2008 at 12:50 PM
I don't like the idea of locking it in a drawer somewhere in case of a break in. I like things to be "clean" and to me, this was easier. Plus my credit score is in the 800s so I doubt it had much effect.
Posted by: Kevin | May 21, 2008 at 12:54 PM
My experience with a JCPenney card, I got one of them in ~2000, then cancelled it in ~2002. They are still reporting my account as 'paid in full for month x' every month since then, for the past six years or so. They can't seem to stop it, and everybody refuses to do anything about it since it is not hurting my credit (actually it's helping but I really don't need the assist). It just annoys me that I can't seem to kill this monthly reporting (the credit reports show 'closed by consumer' properly), I've even sent a few letters. Has anybody had this experience? Any suggestions?
Posted by: Thomas | May 21, 2008 at 07:11 PM
@t3ch I also don't see what the big deal is. I do sign up occasionally for a store card to get a discount. Most of the times, I don't use it thereafter. If I shop in a place a lot, I may use the card - they send nice coupons. I pay in full every month, so I don't care about their interest rate.
@DebtHater: " I can use it anywhere which lead me to charge on it irresponsibly"
A piece of plastic doesn't have the power to lead you to so anything. It doesn't cause itch, it doesn't give you electric shock if you don't use it. If you used it irresponsibly, it was entirely your fault. We have free will.
@Sarah - how do they make it difficult to pay and easy to miss that the payment is due? I have the card from Ann Taylor, I got it to get a discount on a purchase but never used it because I prefer my regular non-store card for cashback. So I am curious. If they don't have automatic payment option, don't they at least have online payment?
@NillaMo "I felt like I was a drug dealer - "Here, let me help you get into debt"
If people are irresponsible, it is their problem. They could refuse to get a card; could get it and then not use it, could use it and still not charge more than they can afford. People make a conscious choice to spend more than they have. Nobody holds a gun to their head. I prefer to compare cards to alcohol than to drugs: not everyone who drinks is an alcoholic.
Posted by: kitty | May 21, 2008 at 10:48 PM
I have a Nordstrom Visa, and I love it. I can also use it anywhere, not just at Nordstrom. The rate is average (10%), and the conditions and fees are the same as for any other card I've had.
The reason I got it was that I had found myself shopping there more and more often for various things, and then one day I found a set of dining chairs there on clearance while I was furnishing my new home. When I bought them I opened a card to get the discount, which I don't regret since it was such a big purchase.
I probably do shop there more often because I have the card (I don't ever carry a balance though), but I don't shop more; I've just cut out some other retailers.
It's great for both sides. I get better service, free shipping, cash back, and invites to special events, and the store gets a more frequent shopper.
Posted by: Meg | May 30, 2008 at 04:42 PM
but my question had nothing to do with whatever y'all are talking about i am trying to get to know how do you get a free credit card without putting money on it but however y'all gave me some tips one i really like for example a girl purchase something from macy and that she didnt have her card and she sign up and got 15 PERCENT OFF and thatshe got one in the mail and she had canceled it the rest that y'all wrote were ok i think
Posted by: dealexandria mccall | March 16, 2009 at 09:50 PM