Why do many say store cards are bad?

[Anonymous]

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@CreditDunce wrote:

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@Anonymous wrote:

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

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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.

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I see the black helicopters flying over head. I hear that if you admit to walking across the street without 12 inches of bubble wrap on that your rates will go up. I did my LN to see what is going on. Do the research, like I did. Don't let idiotic BS control you. Insurance companies have a way to make their model scale with how society evolves. I am more worried about claims, tickets, RX use, sickness, etc impacting my premium then the 25 basis points that me having a promotional store card in my wallet will cause. Do the reseach, understand... and deal.

[Turbobuick]

If the store card can offer you more net gain than a Visa/MC, then it can be worth having. Typically store cards offer percentage off at the register or free financing on larger purchases. They usually have the worst interest rates and charges allowed by your state.

I only own one. A Target reloadable debit by Amex. When I got it, it had much better money saving benefits. Biggest perk was I could load it with any credit card and pay bills... alas. Now I can only load it with cash or debit. Took the fun right out of it. 

Still Target has great bargains at times. I've been known to buy 200+ rolls of TP or 50 rolls of paper towels in a single purchase, and birdseed by the subscription.

[RonM21]

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@irunfromcredit wrote:

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@Anonymous wrote:

That's just it.  These big cards offer 0% financing any time you want.  In my opinion that is a huge bonus to put the burden of store purchases on a card like that while leaving your major cards free and clear for other things.

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+1

One of the reasons why store cards aren't so bad.  I do also think it really depends on the need of the card holder.  I am a frequent shopper of the Gap, Inc stores and I outfit my son in their clothes as well...So it made sense to me to have their Banana Republic card. The rewards are good for my household shopping habits.

Also, for Amazon, the 5% cash back and 0% financing outweigh the rewards on the Amazon visa card...

For the poster saying that v/mc have lower APR versus the store cards..that isn't neceassrily true as well.  There are number of store mc/visas with the same APR rate as the retail cards. 

Anyhow my point is that the number of store cards one has isn't necessarily a "bad" thing.  As long as it fits the consumer's spending needs.  

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@irunfromcredit wrote:

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@Anonymous wrote:

That's just it.  These big cards offer 0% financing any time you want.  In my opinion that is a huge bonus to put the burden of store purchases on a card like that while leaving your major cards free and clear for other things.

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+1

One of the reasons why store cards aren't so bad.  I do also think it really depends on the need of the card holder.  I am a frequent shopper of the Gap, Inc stores and I outfit my son in their clothes as well...So it made sense to me to have their Banana Republic card. The rewards are good for my household shopping habits.

Also, for Amazon, the 5% cash back and 0% financing outweigh the rewards on the Amazon visa card...

For the poster saying that v/mc have lower APR versus the store cards..that isn't neceassrily true as well.  There are number of store mc/visas with the same APR rate as the retail cards. 

Anyhow my point is that the number of store cards one has isn't necessarily a "bad" thing.  As long as it fits the consumer's spending needs.  

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+1 I also think it dependson the coardholder's needs and usage. I personally, don't have much issue with the few store cards I have, but I can alos see how it would be a waste for others. Depends on your situation.

[Anonymous]

if store cards are worth a lot to the person and he/she uses that particular store, then go for it. Obtaining store cards just for UTL purposes and never uses it then is a big no no. But to each their own.

....if Sephora or Ulta had store cards I will be bankrupt....lol jk  

[dragontears]

I agree with a lot of the other posters.

There is nothing really wrong with having store cards for stores you actually shop at and they provide you with savings. The biggest reason store cards get a bad rap is when people go nuts and apply for a bunch of cards to stores they never shop at, ending up with a bunch of useless accounts typically with low limits.

I personally have no store cards simply because I am not loyal enough to a specific store to justify having a card with them.

[Anonymous]

I've always been anti-store cards but pizza1 helped me understand (when I first joined this forum) that those things are good for rebuilders; so, they do have a place for some. With that being said, I've always seen store cards the same way I see those 2.5 pound plates at the gym - I don't use them. Come to think about it, I've always, and for the longest, thought those 2.5 pound plates were coffee coasters until one day I actually held one (to get it out of my way). But yes, if people are happy with their store cards, that is all that matters.

[AverageJoesCredit]

This last post , oh so true. When you are rebuilding you get approved for one store card and its off to the races.... You want to keep getting approvals and building up your credit file until you realize you just maybe doing more harm than good. Not everyone has found this great place where you can learn from others mistakes and apply them to your own. Heck i really never shop at Old Navy but i was oh so tempted to apply for their credit card just because i was gettin approved for others like Pennys and Macys. Thankfully i resisted the urge as i already have enough cards to be stuck with one i dont really shop at ( no disrespect if you have this card im sure its valuable to someone ) . Great thread though

[Guyatthebeach]

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@Anonymous wrote:

Obviously it's a common sense that a large amount of little store cards cluttering a profile is messy.  But what about 1 or 2 big store cards?  I never thought having say Lowes or Amazon was a problem since they are big business and give out large limits.  But I see people on here cautious even about those.  So what's the deal?

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WaveRider,

People knock on store cards because of how easy they are obtain, have low limits that rarely increase, high APR's, and generally have a higher balance. If you are rebuilding your credit, store cards can hurt your recovery efforts if you abuse them.

Now if you can control yourself, they are store cards that can help make you money if you pay them in full monthly, like Target and Walmart. I like Target because you get 5% and it's more secure than the debit card and you can pay it off right there in the store. The Walmart card is the the same where you get 2% back for gas and then a percentage off for using it in the store. Of course you can pay it off right at the cash resigter. I make sure the balance is at or less than 10% every month and pay it usually before the bill arrives. I also love the Best Buy card for the great finance rates.

The trick to store cards is not to get caught with high statement balances and pay that high APR.

Life's a beach!

Guyatthebeach

[jamesdwi]

Sorry I disagree, Amazon store card is much better than the Chase Amazon card, if you spend alot at amazon. The 0% interest deals rock and the ability to grow your CL with a phone call and SP make the Amzon card a no brainer. Especially if you are rebuilder. I have had the card 4 years, never paid a dime in interest. Yet nearly constantly carried a balance on it.   Spent way too much money on Amazon...  

If you get the chase version and get a 1k limit, it will most likely stay there unless you take a hard pull or put in enough spending to justify an auto-CLI Sure its a major credit card but unless you have an awesome credit history, and a great income the card will be limiting to the store card. Don't get me wrong I like chase, there other cards are better. Want to use a HP, get a CSP, and $300 cash back and a minimum of $5k limit. And loads of other benefits.  

[KSK1912]

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@MrsCHX wrote:
No, they didn't say they don't favor them. They said they're useless and a waste of a HP.

Just sayin'

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It's useless to "some" maybe, but not for all. It was several comenity accounts that helped me start rebuild my credit last year june. Total of 13 accounts and only about $3K total limit. Now in less than a year they total about $15K and have a year of on time payment history on all acounts. I will start closing them end of this year, couple at a time. But at least they have been a good ladder to step on to climb higher. So i would not say they are bad, it just depends on the individual's circumstances.