Retailers are expecting a grim holiday scenario what with people losing jobs, the economy contracting, and companies not opening up new jobs. Card owners and consumers have to dig deep in their arsenal to mitigate dismal forecasts and one product that they are hoping to cash in on is store credit cards.
In their desire for people to lap up store credit cards, retailers lure customers with big upfront discounts, something that a lot of people find irresistible. It is typical to find store cards that reward people who sign up, ten, fifteen - even up to twenty percent discounts off purchases. However, this type of card also has its inherent flaws that consumers need to watch out for.
One is that getting an additional card might fuel or encourage individuals to spend more, which is not really that wise of an activity during these tough economic conditions. Another disadvantage is high interest rates. These cards are notorious for their astronomical interest fees which are a whole lot higher than standard credit cards.
Store credit cards are designed only for store use; therefore you cannot use them in establishments that are outside the store or in establishments that are not affiliates. Store credit cards have very limited use in comparison to well known card brands which can be utilized just about anywhere - even overseas.
Another limitation is the low credit limit, something that is quite rare in most other general credit cards.
For people who are trying to establish credit, experts do not recommend acquiring a store card to get one started. People would be better off getting standard credit cards from well-known companies, which offer attractive deals and better rates to users.
For people who already own store credit cards, caution should be exercised. Customers should educate themselves on the cards' features and limitations. Because these cards charge high interests and offer low credit limit, one's credit score could get overly sensitive even to slight movements.
Since store credit cards have low credit limits, one's credit scores could get negatively impacted quite easily. The same is true with high interest rates, if consumers are not able to keep up with payments.
A good way to get around this type of situation is to try to keep purchases at least 20% below the assigned credit limit. Another is to pay off everything when due dates are on the horizon. Always pay bills promptly. Moreover, resist the temptation to purchase anything using the card until balance has been fully paid.