You just spent the last hour inside your favorite retail store trying on clothes for an upcoming vacation. As you make your way to the register you know exactly what the cashier is going to say to you. They are going to ask you if you want to take out their store credit card so that you can save 20% on your purchase. Knowing how much your shopping trip is about to cost, you seriously consider the offer. Before you say okay it’s important to understand if it’s really a smart choice.
Here are four questions that you need to ask yourself so that you can make an educated decision on taking out a store credit card.
Do you shop at this store frequently enough to make it worth it?
If you do not frequently shop at this store then you most likely will not be able to see any benefits from the card beyond just the original discount. A lot of store credit cards reward their cardholders based on the amount they charge each month. If you don’t plan on charging very much then using your everyday credit card might make more sense for you.
Can you pay the balance in full each month?
No matter what card you decide to use, you should be paying the balance in full each month. This helps to avoid any finance charges. If you are going to apply for this store card it’s even more important to pay the full balance because the interest rate on store cards can be drastically higher than standard credit cards.
Is the savings you will receive really worth it?
Before you fill out your application for the store credit card you need to ask yourself if the first purchase savings you will receive is really worth the hard inquiry on your credit report. Do a quick Google search and see if the store offers any coupons. If they do, then you might want to think twice about getting the credit card. A lot of times you can get an in-store coupon just for signing up for a stores email newsletter. If you don’t need to make your purchase immediately you can sign up and wait for the in-store coupon to be mailed to you.
Is this the right time?
One of the most important questions that you can ask yourself is whether or not this is the right time for you to apply for this credit card. Are you planning to buy a new house or finance a car in the near future? If so, then the 20% savings you will receive probably will not be worth it. Lenders do not like to see credit application near the time of a mortgage application.