Beware of Store Brand Credit Cards

FOR IMMEDIATE RELEASE
Orlando, Florida, United States of America (Free-Press-Release.com) March 22, 2011 -- Store credit cards may seem like a good idea especially if you shop somewhere often but be warned retail store credit cards are not a good idea. They not only offer higher interest rates than traditional credit cards but often times they can only be used in the store and not at other locations. They can not only hurt your credit but they usually feature extra fees you may not even be aware of until you sign up. If you are thinking about applying for one you may just want to think twice.

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Beware of Store Brand Credit Cards

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One of the things that consumers don't realize is that many stores offer their cards through shady sub-prime lenders. The card may look great and the retail store may have great customer service, but the store will not be the one in charge of your line of credit, the lenders will. It is vitally important that you pay attention to what bank would actually be issuing you a line of credit. Most stores will simply tell you that the card will be a visa or MasterCard and will not even mention the bank you will be doing business with. Stores cards like the Gap Card and the Banana Republic Card for example are issued by GE Money which is notorious for issuing late feeds and finances charges even if you paid balance in full and Barnes & Nobles issues their card through the Barclays Bank Delaware which has an equally bad reputation. Most consumers fill out applications without knowledge of the reputation of these banks or even what bank they are signing on to do business with. Quite frankly it's a better idea just to apply with your bank since you are already familiar with them.

Even applying for store credit cards can hurt your credit score. Every time you apply for credit and a creditor pulls a report it hurts your FICO score. A hard inquiry can drop your FICO score by as much as 3-5 points and more than 6 inquires over a six month period can wreck serious havoc on your credit score. Even if you are approved for a card the first time it can still potentially hurt your credit score since having excessive lines of open credit drops your credit score and closing unused accounts can hurt your credit score in the short term.

To compound matters store credit cards have ridiculously high interest rates compared to traditional credit cards. If you have good credit you can generally qualify for a credit with an APR of 11%-15% but no matter what your credit score is you can expect an APR in the range of 20%-24% on store credit cards. Why would you want to apply for a store credit card with such a high interest rate when you can just use a regular credit card at the store just as easily as you could any place else.

Store credit cards usually only offer limited perks. While many rewards cards out there offer cash back, airline miles, and rewards points, store cards typically only offer store credit or discounts on store merchandise. Considering the generous rewards programs that other types credit cards offer today these days these small perks are not all that generous.

While the perks are small the fees are big. Not only do many store credit cards feature high monthly fees but if you miss one payment you could be stuck paying a heavy fine and a penalty interest rate of 30% or more for as long as you retain the card. If you stay vigilant and watch your spending carefully you maybe able to avoid certain fees but you should have to be on red alert every time you use your card.

You may also be surprised to learn that some store cards can only be used at the store that issues them. While this might be okay if you know that you will be shopping at the store often, it doesn't make sense considering all of the other drawbacks these type of cards have to clutter up your wallet with a card that has such limited use.

When you take an honest look at what store credit cards offer it's easy to see that non-store-brand cards are the way to go. Whether you are simply looking for a line of credit or you are hoping to earn rewards on your purchases there are tons of cards out there offer you many of the same benefits with less hassle, more convenience, and a much lower interest rate. Resist the temptation of store brand cards and start looking for a regular credit card today!

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