@Anonymous wrote:I'm just curious on everyone's thoughts on store cards. How do they work for you? I'm thinking about possibly getting one but i'm not sure if i should based on my scores or just in general.
They have to be useful and add value. The majority of mine give me discounts or 0% promotion for financing large purchases. The only store card I've closed has been Lane Bryant; the card was useful but didn't want to grow, so the low limit became an issue. Oh yeah, and Fingerhut - done with after rebuilding.
@Anonymous wrote:I'm just curious on everyone's thoughts on store cards. How do they work for you?
They have their uses but it depends. I decided to close my remaining ones a few years ago and have no desire to get more.
Pros:
- They tend to have less strict underwriting so easier to get approved with a thin file or lower scores. Consequently, very useful for credit building in moderation.
- Likewise, for people with marginal credit, it may give the ability to buy things on credit if they cannot qualify for a major bank card.
- If they are from a store where you shop frequently, they can be helpful. Stores may offer special discounts and promotions to cardholders. If you don't naturally find yourself shopping in a store at least every few months, they may not merit a dedicated card.
Cons:
- Potential impact on insurance rates in certain states as previously discussed.
- Many store cards can only be used in a single store, so taking up extra space in your wallet for a card you may use sporadically. Major network bank cards like MC/Visa/AMEX are more flexible and simplifies your charges.
- It's another account to monitor for payments, fraud, etc. so adds some workload.
- Higher fees and APRs are common, even with great credit. Not that you ever want to fail to pay on time or carry a balance, but you really want to avoid these with store cards!
- Lower credit lines are common, even with great credit or other high credit lines, which may affect utilization impact. Also, excessive amounts of store cards with low limits may drag down your average credit line which (I believe) may lower starting limits on new accounts, but that's just my speculation. It's a matter of their balance in your overall lineup.
- Signing up for a card highlights you to the store which may greatly increase the snail mail, email, or text notifications you have to deal with. While some were helpful, I got tired of constant reminders to go shop with certain stores. But if you turn off reminders, you may miss out on the special deals when you want them.
- Store cards are much more sensitive to closure from non-use than major bank cards. I can't tell you how many cards I've had closed and often didn't find out until I tried to use them again. Very annoying, especially after taking the hard pull and new account penalties. So back to the rule that they may be useful .... IF you will naturally use them often.
If you shop frequently at a specific brand then it may make sense to get a store card depending on the rewards/benefits it offers. For me I haven't shopped at a Sears in a long time but still got it because of the constant TYP offers even it took a few months for them to roll in.
This is the ultimate YMMV issue.
Some cards - like VS, Overstock, DSW - offer nominal benefits to card holders, but also pack heavy interest rates as well.
Others - like Wayfair, for example - offer an awesome array of products and special financing. Wayfair often starts you off with a $3,000-5,000 line and 6-12 month deferred interest financing, which can be extremely useful if you need to replace appliances, redo your kitchen, etc.
In the end, getting store cards just to have them isn't probably the wisest strategy, but getting and using cards with tangible usage benefits is almost always beneficial.
