by Joseph Kenny | 06/22/09

Store credit cards are everywhere, and you can always save a significant percentage off your purchase today if you sign up for one. The question becomes whether these store credit cards a good deal or not. The truth is that they have both positive and negative aspects. Awareness is the key to deciding if store credit cards will help you in the long run or if they will hurt you and your credit score.

Pros Of Store Credit Cards

There are many bonuses that come with store credit cards even beyond that initial rush of saving on today's purchases. Many cards do not stop just with this initial savings. Some cards present you with opportunities to save in the form of ongoing discounts or special shopping days where you can use your card and continue to reap special rewards.

With some cards, you can make returns without receipts. This may not seem like much, but if you return items on a regular basis then not having to worry about losing a receipt can be a nice perk. Some cards go further to offer cardholders free gift wrapping and the ability to earn points toward gift cards.

Additionally, these credit cards, like any credit cards, can be used as a vehicle for building a credit history. It can be easier to get approved for store credit cards than for traditional ones which is helpful if you have trouble getting approved for the traditional variety.

Cons Of Store Credit Cards

Store credit cards tend to carry with them high interest rates. This may not be true for all such cards, but there is a clear trend in this direction. The high interest rate could, in time, negate any of the savings that you experience as a result of using the card.

These cards also often come with low credit limits. This makes it far too easy to make a few purchases and to come close to your credit limit. This, in turn, could lower your credit score. This lower score could trigger a domino effect and your other cards could raise your rates or decrease your credit limit in response to this lowered credit score. The low credit limit that often comes with cards such as these can become a problem if you do not remain aware of it and its possible repercussions.

Applying for a store credit card means that there will be a hard inquiry on your credit report. This hard inquiry has the potential to lower your credit score by 10 to 30 points in some cases. If you go for more than one store card then you might see an even greater decrease in your credit score just because you keep applying for store cards.

Remember that closing the account will not instantly remove it from your credit history either. The account will remain on your credit record for seven years even if you close it shortly after you open it.

Finally, new cards decrease the average age of your credit history. This, too, lowers your credit score.

Store credit cards have their upsides and their downsides. Some are inherent in the cards and some exist only in how you use the cards. Having this complete understanding of the complexities of store cards allows you to understand the potential ramifications of saving an extra 20% off today's purchase.