Thoughts On Store Cards?

[Anonymous]

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@Citylights18 wrote:

What store cards do for you is open up financing ability so you want to open one unless you intend to be a long term customer. That said there are different classifications of store cards.

1) Wholesale Shopping (Amazon/WalMart)

2) Department Stores (Macys/Sears)

3) Electronics (Apple/Samsung)

4) Home Improvement (Home Depot/Lowes)

I listed big names and those are the most valuable. I wouldn't open one if I didn't see recurring purchases. The last one I opened 2 year ago was a Samsung card for appliances with the idea that in the future I could also put a cellphone or computer on it. 

But if I was to build up a new credit card system I would start with a Trifecta from one of the issuers first for the SUBs, then a few travel cards before I'd load up on store cards. A big purchase is a perfect excuse for opening a bank revolver since they'll offer at times 10% or more points per dollar spent.

So you could open up a store card to save 5% on a purchase or use 5% rotator card which has that store category under bonus that quarter.  Thus you might be smarter just to open up a Discover or a Freedom and take advantage of the 5% bonus category plus the promotional SUB they are offering.

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I like 1 and 4.

As for 2 I hope that everyone reading this thread in 2020 outlives Sears as a going concern.

Citi is currently among the least restrictive with product changes.

Hopefully that will benefit cardholders whenever Sears is finally liquidated but that is no guarantee.

[MrZero]

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@K-in-Boston wrote:

Store cards can have an effect on auto insurance industry scores, except for CA, HI, and MA where credit scores can not be a factor in determining rates.

I agree that store cards are great as long as they offer you something in return and you will continue to use them.  I get a ton of value from mine.  For building credit alone, there are often better options if you would not otherwise use them.

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This will also be the case in Michigan starting July 1st when our auto insurance changes go into effect.

[Anonymous]

I've really been looking into the Amazon Prime Card and the Best Buy Citi Card cause i shop there very frequently. My main thing was would it really be benifical to get cards for these places in the future when my credit is too par or just stay away from store cards. Reading this thread has me thinking twice just to the fact that it impacts auto insurance.

[wasCB14]

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@Anonymous wrote:

I've really been looking into the Amazon Prime Card and the Best Buy Citi Card cause i shop there very frequently. My main thing was would it really be benifical to get cards for these places in the future when my credit is too par or just stay away from store cards. Reading this thread has me thinking twice just to the fact that it impacts auto insurance.

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I favor Amex or the Citi Costco Visa for electronics purchases (extended warranty coverage).

[digitek]

I thought the store card thing effecting insurance rates was specifically for store cards at auto parts store. That might reflect on the odds of someone making a claim, whereas I can't see something like having an Amazon store card having any correlation to someone making an auto insurance claim.

[Anonymous]

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@digitek wrote:

I thought the store card thing effecting insurance rates was specifically for store cards at auto parts store. That might reflect on the odds of someone making a claim, whereas I can't see something like having an Amazon store card having any correlation to someone making an auto insurance claim.

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The argument from the creators of the scoring algorithms that ding you for consumer finance accounts is that people using consumer finance accounts are desperate so they represent a higher risk. Seems arbitrary since we as consumers do not know what is and is not defined as a consumer finance account.

[K-in-Boston]

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@digitek wrote:

I thought the store card thing effecting insurance rates was specifically for store cards at auto parts store. That might reflect on the odds of someone making a claim, whereas I can't see something like having an Amazon store card having any correlation to someone making an auto insurance claim.

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It's a very controversial practice, which is why it has been barred in some states.  But the insurance industry working with Fair Isaac and others determined that there is a statistical correlation between a number of credit factors and the likelihood and associated costs with consumers meeting certain criteria to file a claim.

Like most scoring models, different weights will be applied to different types of consumers.  Someone with a thin profile and a lot of recently-acquired store cards and a subprime loan or two from a consumer finance company will likely feel the impact of that more than someone with an established history of bank cards and traditional loans who decides to get a department store card or two.  And in the latter case, it may be a non-issue.

[Anonymous]

When I was rebuilding, Comenity and the SCT was my friend. My first $10K limit came from Overstock. Since then I have received bigger better CC. I still brag about the $150 ladder from Home Depot that cost me $25 after all of the discounts when I applied. Similar experience at JC Penny. Another purchase at Home Depot. Another app. $75 off the top. Getting my Goodyear card saved me more than any cashback CC discount. I receive a lot of emails/snail mail coupons from the above and my other store cards. A lot of good deals. Sometimes I take them up on their offers and sometimes I dont. 

I know a few/several/a lot on here consider them to be toy cards. For me, they work. After reading some of the Macy's SCL and CLI on the forums, I wish I needed a new suit or two.

[Anonymous]

Apply sparingly. Get only cards that you will use regularly. I have 1, my max would be 2. They have quirky terms and policies, and some major credit card issuers look at too many of them in a negative light. 

[UpperNwGuy]

I closed all five of my remaining store cards on a Saturday morning in 2017. The cards in my signature block below are all general purpose Visa cards that work everywhere, including at the stores whose cards I held, so I lost nothing by closing those cards. The store cards were all issued by banks that I didn't like:  Synchrony, Comenity, Capital One, and Citi.  And they all had very high APRs.  My credit score did not decline when I closed the five store cards.