You always have to put up with a sales pitch wherever you go. In any of the big retailers, they substitute McDonald's inane "Do you want fries with that?" With a "But wouldn't you choose to save 15% on this purchase today?" They just don't let you be until you open a store brand credit card with them. But why wouldn't you apply for credit cards like this? They promise to give you no-interest credit for more than a year, and you get that 15% off. When youare trying to make ends meet over Christmas, it does sound tempting.
But before you begin applying for credit cards like this on a whim, perhaps you need to think it over. They call these private label credit cards in the biz; now if you miss a payment it's tempting to think that the benefits you get on these cards are the same ones that you get on top of the standard benefits on any general issue credit card. That isn't really true though. If you ever carry a balance, or ever miss a payment, you quickly wipe out any savings you ever made.
If you look a little closer at private label credit cards, these products are the same cards that any bank would offer customers with a subprime credit score - where their credit scores are too new to make any sense, or are old enough, but not good enough. Why on earth being where you are in life, would you apply for credit cards where you pay a 25% interest charge?
You need to get a new credit card when there's something really good about the way it is structured - it should have a lower interest rate, or it should have great financing opportunities. Getting a store brand credit card doesn't give you 15% off on every purchase; it only gives you that on the first purchase. Why would you ever get into a whole credit card deal for a one-time benefit?
When Congress passed the credit card consumer protection law this year, they added in a new rule that credit card issuers need to follow now - they need to determine how well a customer is able to pay a credit card bill, before they issue him a new card. They now require that you put down information about your income and your assets when you apply for new credit cards.
This isn't going to make it any better though. The stores aren't required to verify that the information you give is correct, and you are welcome to lie on your application. The law does not require that they verify anything, because when you're standing in line at the checkout, wasting time on a verification will only get everyone impatient. But that is a pretty lame excuse, isn't it? The whole financial crisis we are in today was caused by the kind of cultural values that permit instant check out credit cards.
That's not to say that you're not apply for credit cards at a store at all. Those discounts can be pretty valuable when you're doing a lot of holiday shopping at one store. You just need to know how to not blow your savings by being careless with repaying later. Getting a store credit card looks bad on your credit report. Anytime you have an extra line of credit in your name, your credit score goes down. The more open credit you have going, the more they assume you're likely to default. Even making a credit card inquiry stays on your record for a year. And getting a new credit card, the store version or not, makes your average credit history a lot younger, and that affects your score. The longer you have a credit history, the better your score is.
So here's the deal. You can apply for credit cards at the store and not hurt your credit if you are in great standing with your other regular credit cards. If not, opening one store credit card would not be a bad idea. Opening more than one though, nearly always is.