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Why do many say store cards are bad?

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kdm31091
Super Contributor

Re: Why do many say store cards are bad?

If you are truly loyal to a store, store cards can provide benefits you won't get with a major CC, such as discounts/early access to sales/etc.

 

My main issue with store cards is that tastes and spending patterns change. So while you may shop at Kohl's a lot right now, you may later decide they are overpriced, or you just stop shopping there as often for any number of reasons. Then you are stuck with a basically usleess card, yet you can't just go buy a pack of gum with it to keep it active; you have to go back to Kohl's and use it. Of course, it's not a problem if you shop there anyway, but like I said, tastes change. Keep that in mind when racking up the store cards. Is this a place you will really shop frequently for a long time?

 

The Amazon Prime is a great option for many but it still requires the fee of $99 for Prime membership so it's not just an automatic great idea for anyone who shops on Amazon. You have to spend enough to outweigh the fee (i.e., the point at which you would have paid $99 in shipping without Prime) before it's really saving you anything. If you aren't a huge spender, it may not be the case.

Message 31 of 55
Anonymous
Not applicable

Re: Why do many say store cards are bad?

You know that is kind of a good point. I have refrained from opening more cards for this reason although sometimes they are enticing with the signup percentage off and what not.  I have 2 store cards, a Macys and the Best Buy because I am always going to need clothes and I'm a tech geek so like the ability to get stuff with payments. But that ia a good point i never thought of with regards to changing tastes and what not.


@kdm31091 wrote:

If you are truly loyal to a store, store cards can provide benefits you won't get with a major CC, such as discounts/early access to sales/etc.

 

My main issue with store cards is that tastes and spending patterns change. So while you may shop at Kohl's a lot right now, you may later decide they are overpriced, or you just stop shopping there as often for any number of reasons. Then you are stuck with a basically usleess card, yet you can't just go buy a pack of gum with it to keep it active; you have to go back to Kohl's and use it. Of course, it's not a problem if you shop there anyway, but like I said, tastes change. Keep that in mind when racking up the store cards. Is this a place you will really shop frequently for a long time?

 

The Amazon Prime is a great option for many but it still requires the fee of $99 for Prime membership so it's not just an automatic great idea for anyone who shops on Amazon. You have to spend enough to outweigh the fee (i.e., the point at which you would have paid $99 in shipping without Prime) before it's really saving you anything. If you aren't a huge spender, it may not be the case.


 

Message 32 of 55
takeshi74
Senior Contributor

Re: Why do many say store cards are bad?


@Anonymous wrote:

Why do many say store cards are bad?


Because it's far easier to rely on "X good, Y bad" then to carefully consider each.  Memes like that are easy mental shortcuts though they have their shortcomings.  There are plenty of them like "AmEx hates balances", "a lot of usage will get you a CLI", "higher limits beget higher limits", etc.

 

For any card, it's up to you to determine what specifically suits your needs/wants.  Do your due diligence.  Do a proper analysis.  Run the numbers for your spend.  Don't rely on memes.

 


@Anonymous wrote:

But I see people on here cautious even about those.  So what's the deal?


Akways consider your sources.  You'd need to ask those people.  However, does it really matter?  If your needs/wants don't align with another's then that person's conclusions probably aren't going to be relevant to you.

Message 33 of 55
Anonymous
Not applicable

Re: Why do many say store cards are bad?


@takeshi74 wrote:

@Anonymous wrote:

Why do many say store cards are bad?


Because it's far easier to rely on "X good, Y bad" then to carefully consider each.  Memes like that are easy mental shortcuts though they have their shortcomings.  There are plenty of them like "AmEx hates balances", "a lot of usage will get you a CLI", "higher limits beget higher limits", etc.

 

For any card, it's up to you to determine what specifically suits your needs/wants.  Do your due diligence.  Do a proper analysis.  Run the numbers for your spend.  Don't rely on memes.

 


@Anonymous wrote:

But I see people on here cautious even about those.  So what's the deal?


Akways consider your sources.  You'd need to ask those people.  However, does it really matter?  If your needs/wants don't align with another's then that person's conclusions probably aren't going to be relevant to you.


I do what I need when I need it regardless. This is forum about learning and sharing experiences.

Message 34 of 55
Anonymous
Not applicable

Re: Why do many say store cards are bad?

Initially, store cards were my friends.  I had charge-offs in 2009, and couldn't get a subprime bankcard (never attempted First Premier or Credit One because of the outrageous fees associated with these banks).  But, in 2013, the doors opened for me - I was approved for VS and Care Credit in 7/13 and Marathon Gas Card in 12/13, and nursed these cards like a newborn baby.  In Feb, 2014, I apped for the Discover It card, never thinking I'd get approved.  But, yep, I did with a SL of $800.  I was estatic.  From that point on, approved for 3 Amex's, Ventures, Venture One, Quicksilver One, Quicksilver, Nordstroms, and Macys.  

 

I have closed some of my store cards - Care Credit, Macys, and just the other day, VS.  I simply do not need them anymore.  I've got my Marathon CL up to $3K, and even though cli's have stopped for this card, I'm going to keep it open (I need it's age) since I've opened so many new cards in the last couple of years.  I will be closing my Nordstroms next week.  

 

Will I app for another store card? Nope.  Do I think they're bad? Nope on that one too.  They served their purpose in my rebuild, and I appreciated every single one of them.  Smiley Happy

 

 

Message 35 of 55
CreditDunce
Valued Contributor

Re: Why do many say store cards are bad?

For me there are two negatives about store cards.

1) They hurt your insurance risk score (LN).   A lower score can mean paying more for auto/home insurance.

2) Stores go out of business.  Long term they may not make the best anchor lines.  CCC's can go out of business, too.  However, mostly your card will be sold to someone else who will keep the same open date.

Message 36 of 55
Anonymous
Not applicable

Re: Why do many say store cards are bad?

Store cards have their purposes. I used to have a few, but now I only have Amazon. I don't believe Amazon will be going out of business anytime soon Smiley Very Happy 

 

It's whatever works for you! Smiley Happy

Message 37 of 55
Anonymous
Not applicable

Re: Why do many say store cards are bad?


@CreditDunce wrote:

For me there are two negatives about store cards.

1) They hurt your insurance risk score (LN).   A lower score can mean paying more for auto/home insurance.

2) Stores go out of business.  Long term they may not make the best anchor lines.  CCC's can go out of business, too.  However, mostly your card will be sold to someone else who will keep the same open date.


Just curious, how do they hurt your Insurance risk score?

Message 38 of 55
CreditDunce
Valued Contributor

Re: Why do many say store cards are bad?


@Anonymous wrote:

Just curious, how do they hurt your Insurance risk score?


Here is an article on car insurance rates:

http://www.consumerreports.org/cro/car-insurance/auto-insurance-special-report/index.htm?utm_content=buffer7bcd8utm_medium=socialutm_source=twitter.comutm_campaign=buffer

 

If you are interested in your LN scores, LN sells auto/home insurance reports:

https://personalreports.lexisnexis.com/lexisnexis_attract_score.jsp

 

The reason codes are listed here:

https://consumer-solutions.custhelp.com/app/answers/detail/a_id/2523

There are negative reason codes for number of retail cards, number of gas cards, number of department stores, etc.  Different kinds of retail cards have different negative reason codes.  For example code 0134 is for having more than two (closed or open) department cards.  There is also a code for number of open department cards.  Not to mention the codes for the number of department cards with balances, etc.  Gas cards, other retail cards and finance company accounts all have similar negative reason codes.

 

When I purchased my LN score, my top reason codes were about all of my new credit accounts.  I do have two store cards: Lowes & Target (not sure if Target counts).  But store cards were not one of my top two reason codes. 

 

We had a thread in understanding FICO scoring near the end of last year/beginning of this year with more info if you are interested.

Message 39 of 55
Anonymous
Not applicable

Re: Why do many say store cards are bad?


@Anonymous wrote:

@CreditDunce wrote:

For me there are two negatives about store cards.

1) They hurt your insurance risk score (LN).   A lower score can mean paying more for auto/home insurance.

2) Stores go out of business.  Long term they may not make the best anchor lines.  CCC's can go out of business, too.  However, mostly your card will be sold to someone else who will keep the same open date.


Just curious, how do they hurt your Insurance risk score?


In that score model they are considered a negative. In fact, in insurance risk scoring there's lots of stuff that's considered negative. It's a seriously rigged model designed to keep insurance costs high.

Message 40 of 55
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