You know when you're checking out at the cash register and the cashier asks you if you'd like to save an additional 10% (or 15% or whatever) by opening a credit card? And you stop and think for a moment, "saving a little more money would be nice". Let me save you some fretting time and suggest that you politely decline that kind salesperson's offer. Most of them don't realize the damage you do to your credit score by randomly opening unnecessary credit lines.
Here's why you should avoid them all together:
The credit check - Each time a store or any entity runs your credit score, you get a few points knocked off. Those points add up. Also, the limits on these cards are typically lower. So the low credit limit combined with a high purchase, makes your utilization rate higher. And that will knock a few points off of your credit score too.
The deal really isn't a deal - So the store lures you in with, "You can save an additional 10% off your purchase today." And when you seem a little hesistant, they add, "You can pay it off today. Just do it to save the extra 10%." Now, I'm no personal finance whiz by any means. But saving $5 to $15 bucks (assuming the deal is for 10% off of a $50 - $150 purchase) is not enough savings to justify knocking points off of you credit score and potentially aiding in you buying things you can't afford. (Which is kinda what credit makes you do.)
High interest rates - Now this is something I never thought about when I was in my 20s. The interest rates on store issued credit cards are typically upwards of 20%. I understand that finding a fantastic deal on your favorite designer handbag. But are you factoring in the monthly interest it will take you to actually pay it off? Now I don't dare use my Bloomingdale's or Neiman Marcus cards unless I know I'm going to pay off the full balance when the bill comes.
Summary
Here's the point: credit cards aren't for snagging a hot pair of shoes or your outfit for the upcoming girl's weekend. So why waste your precious credit on using them. Click here for more information on the pros and cons of using retail credit cards.
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