Pros and Cons of a Store Credit Card
Think of stores you commonly shop at. Whether it is for necessities like at Target or for beauty supplies like at Sephora, you may have a list of retailers that you go to a lot. If that is the case, you may have been offered a store credit card. However, what are the advantages and disadvantages of getting these cards? Should you get one since you shop there a lot? These questions will be answered, and you can make the decision!
The advantages of getting a store credit card
When people think of credit approvals, they may typically think you need to have a good score. However, this may not be the case for the store credit card you are looking at. These cards usually have subprime terms which means that people with below average credit can actually qualify for them. If you get a credit card and pay it off on time, then you could actually see an improvement to your score. Another advantage is the fact that store credit cards offer rewards to borrowers. Whether that be discounts, cashback, and more.
The disadvantages of getting a store credit card
While there are advantages, there are also disadvantages as well. These include the fact that these cards typically have low credit limits, and high interest rates. Also depending on the card, you may not be able to use it at any store. For example, some restrictions apply to stores outside of the U.S. like in Canada. When a card has a high interest rate that means they have a high APR which is an annual percentage rating. If you use the card and do not pay it off in full on time, then you may pay a lot in interest fees. You also want to be mindful of the card limit. You should keep your utilization lower than 30% but because these card limits are usually low that doesn’t leave you with much to use.
How can you get a store credit card?
Each store credit card is different, but you can typically apply online, in-store, or through the mail. However, regardless of the way that you apply, these are typically hard inquiries. A hard inquiry can hurt your score. In order to get approved the lender will look at a bunch of factors in order to decide whether or not you will get a credit card. You will get your decision as soon as immediately or within a couple days.
Final Understanding
Store credit cards can be beneficial if handled responsibly. You want to make sure that you pay these cards off in full, on-time every month in order to ensure that you do not feel the effects of the high interest rates. Every store credit card is different, so it is important that you understand the terms and conditions of the card you are looking to get. Take your time to research, do not rush, and you will find store credit cards that are best for your situation.