Reasons why a retail department store credit card may not be the best option for you.
Each of us may get started to sign up for departmental credit card offer in order to take advantage of the discount being offered on the current purchase. However you must build a permanent mindset to ignore these credit card offers if you do not need the extra credit card. Departmental credit cards are typically not the best credit cards to have for general use. They may offer you certain discounts on a particular store but usually do not serve the purpose of the standard credit card or have the advantages of standard credit card. Here are a couple of reasons why a department store credit card may not be very beneficial to you.
· Store credit cards have low credit limit.
Typically a store credit card has a low credit limit. This means that you will find it very difficult to keep your credit utilization on a store credit card at about 30%. 30% is ideally the balance limit that you should maintain on each of your credit cards other maxed beneficial effect to your credit score. But a credit card that has a limit of only hundred dollars will only allow you to utilize $30 without extending this limit. In most of the stores this will limit your purchases to a great deal.
· Store credit cards have high interest rates.
The store credit card typically has a high interest rate it means that you will find revolving the balance to be more expensive proposition. Any discount offer that you might have received during the current purchase it be upset by the extra interest you will be charged by carrying forward the balance to another month.
· Store credit cards do not have a strong impact on credit scores.
One of the benefits of using a credit card and managing it responsibly is the beneficial effect on your credit score. Every time you charge your credit card and pay down the balance every month or relatively quickly positive credit history is reported to your credit’s report which is good for your credit score. While departmental credit cards are also likely to be reported to the credit bureau they do not have the same impact on the credit score as a standard credit card. This is just how the credit scoring model is designed. It does not give so much prominence to a store credit card as a dust was standard credit card. One of reasons could this be that getting approved for a store credit card is typically easier and less stringent process than getting approved for a standard credit card. It is possible that your store credit card may not get reported to the credit bureaus at all. This is something that you should check with the vendor before you fill up application.
· Store credit cards have limited usage.
One of the biggest advantage of a credit card is being able to use it in multiple places for multiple purpose and for the required sum of money. A store credit card may be useless to you in every other place except for the departmental store where you sign up for it. This can make the store credit card far too much trouble to have than its actually worth.
· Store credit cards may encourage you to spend.
You should be aware that the reason why you are offered departmental credit cards frequently and can get on with relative ease is the fact that the vendors stand to gain from the offer. Store credit cards typically like to encourage you to spend. You’ll be offered many advanced is like discounts and increase in your credit limit if you make additional charges. For somebody who is not disciplined and controlled enough with is credit card spending this could be very disadvantageous. A person can easily find himself with an uncontrollable balance since you have made the charges that you would not otherwise have made. A high interest rate on the departmental credit card is also not going to make easy for you to revolve the balance and pay it off quickly.