Credit Card Debt Management

During this, the busiest shopping time of year, it can be tempting to take advantage of discounts available from various retailers through the acceptance of a store credit card offer. Not only will you get a discount, but these retail credit cards generally have very liberal acceptance policies and can help you build or rebuild a strong credit rating.

However, it is very true that people spend more liberally with plastic. According to the Motley Fool:

Studies show that people spend more — and more stupidly — when no actual cash changes hands. We succumb to impulse buys (an estimated 59% of grocery store purchases are not planned) and even tip more at restaurants when we put the tab on plastic.

Why Apply for a Department Store Credit Card? 

The phenomenon of buying bigger now and paying more later (in interest fees) may be manifested in the form of an extra special holiday gift for someone else. It may be a little reward for yourself to celebrate the three miles you’ve walked around the mall in search of the perfect gift. It may be manifested four months down the road with a spring wardrobe overhaul that you really can’t afford. Either way, there is no immediate pain so it’s very appealing - especially when you are a member of the store’s “VIP Club” and receive notices of all the exclusive special offers and sales.

Another thing to beware of with credit cards from department stores and other retailers is the “High-Flying APRs.” Weigh the pros and cons in each individual situation such as:

• What is the APR on this card?
• Is this a store you shop frequently?
• Do you have good spending self-control?

Reasons Not to Apply For A Department Store Credit Card

Merely accepting a card to get the discount is a bad idea because it goes on your credit history regardless. The more credit cards held simultaneously, the worse off you are. At least make it worthwhile and make sure the card and all extra perks like exclusive offers will benefit you often. Otherwise, you’re better off just getting a regular credit card if you are able.

Good Reason to Get a Retail Credit Card

Again, if your credit rating is preventing you from getting a decent offer on a regular credit card, retail credit cards can be a good way to rebuild that rating. They also typically have lower credit limits, so can be a good way to test the waters of self-discipline before moving up to regular credit cards.