Questions Before Applying for a Store Credit Card

Many of the biggest department and retail stores offer their own credit card to customers. While this sounds like a great idea on the surface, especially if you can access a promotion in exchange for signing up, you don’t want to jump at the idea just yet.

Here are several questions to answer before applying for a store credit card:

1. What are you getting in return? If you aren’t taking advantage of benefits in return for signing up, there may not be a good reason to do so. Instead, you can use a credit card that you already have or pay in cash.

In some cases, you’ll receive a special offer in exchange for signing up for a store credit card. This could be anything from an extra discount, such as 10% off your first purchase, to zero percent financing for an extended period of time.

2. What is the interest rate? Even if you’re receiving a discount on your purchase upfront, you need to know how much it will cost in the long run if you carry a balance from one month to the next.

This all comes down to the interest rate. Store credit cards are notorious for being attached to a high rate, often greater than 20%.

3. Do you understand the terms and conditions? If you neglect to read and review the terms and conditions, you may be surprised at what you end up with.

For example, a zero percent offer is often accompanied by a minimum payment. If you don’t make this payment, you could be hit with a large fee. This holds true despite the fact that you aren’t supposed to be accumulating any interest.

As excited as you may be about applying for a store credit card, don’t get too far ahead of yourself. Answer these questions, among others, before you sign on the dotted line and swipe your plastic for the first time.