Re: Why do people use store cards?
11-12-2012 02:57 PM
Every store card has its own set of benefits, but to disparage them all is to miss out on a lot of potential gains.
- private sales A lot of the high-end department store cards (e.g. Neiman Marcus) entitle the holders to private, unadvertised sales in the store and online. Granted, NM has the nickname Needless Markup for good reason and you could probably find better marked prices online than in their store. But in a lot of cities like mine, they are the only place in town that carries certain brands. So these private sales enable you to get the same price or better than what you could find online, AND you actually get to try the clothes on.
- everyday discounts The Wal-Mart card currently has a 15-cent discount per gallon of gas. In my neighborhood, that's an effective 4-5% discount on what is already the best gas price in town. Other store cards can offer high percentage discounts on purchases that far exceed what you get from a more general-use rewards card.
- targeted offers - One of the big reasons stores offer their own cards is because it enables them to track your spending. e.g. I've received targeted-offer coupons from Best Buy that were not one of their regular advertised offers.
- loyalty reward programs - The argument that these are often used to entice you into paying more than the best price just to get the rewards is correct. Frequent flyer programs work on the same principle. But just like FF programs, they can be great when used wisely. With loyalty shopper programs the strategy is the same as with FF programs: join the program for every place where you shop/fly regularly. Pay the best price, but don't miss out on the rewards. I use my BestBuy card to buy things that are already cheaper at Best Buy than anywhere else. This is particularly easy to do with their price match guarantee.
- zero-interest financing - For those of us who PIF, a useless benefit. But for those who do not, a valuable one. Plus, many stores give extra rewards when you finance the purchase
- sign up bonuses - Usually you get a large discount on your first purchase. This is the least valuable benefit and certainly one I would not personally consider worth getting a card for unless the card also had some of the longer-term benefits above. There are quite a few store cards out there whose sole benefit is this signing bonus, after which they're just a high-APR no-rewards card. I suspect these are the ones drawing a lot of the anti-store-card sentiment in this thread. And I share that sentiment with respect to these particular cards. But there are also many cards with the more lucrative benefits above, instead of or in addition to the sign up bonus.
If you can't see the value in any of these, then so be it. I certainly make some similar arbitrary judgements. I run most of my purchases through reward cards of some sort but I still pay my rent with a check and I'm not going to do some elaborate scheme to be able to pay my rent on credit card just for 1% or 2% in rewards. The hassle of that particular scheme isn't worth the reward...to me. And really, "to me" are the operative words there.
To insist that store cards are useless is blind ignorance. Most have at least one of the benefits above, and have their uses for some people in some situations. If that person isn't you, it's no skin off your nose, or mine.
To insist, on the other hand, that particular store cards are useless to you, that's a valid and reasonable opinion. We all have different situations, different needs, different spending habits, different credit behavior. One man's junk is another man's treasure. Call it junk if it's junk to you, but if you believe in civil discourse then stop short of calling another man a fool just because he sees it as treasure.
My Wallet: Amex BCP $10k, Amex Zync NPSL (> 10k), Chase CSP VS $9.2k, C1 Venture VS $5k, Amex SPG $4.5k, Barclaycard Apple V $2k, Walmart (Store) $1.2k, Chase Freedom V $600, BoA Cash Rewards V $500, Best Buy Rewards MC $500
Dream Wallet:Barclaycard Arrival WMC (replace C1 Venture), Amex Platinum (replace Zync eventually), Andrews FCU Global V (chip + PIN for travel). Otherwise, pretty happy with my portfolio now.