Monday, October 26, 2009

Store Credit Cards: Good or Bad Idea?

I have now seen multiple commercials touting their holiday sales - no, they don't mean Halloween. They're talking about those holidays - Christmas, Hannukah, and all the other gift giving occasions that occur during the last two months of the year. I can't believe they're here already! And while I will not really pay attention to Christmas until the day after Thanksgiving like I do every year (it's only fair to Thanksgiving), I'm already thinking about how I'm going to save money on holiday shopping.

Enter the store credit card. You've seen them. Heck, maybe you have one or more. When I was younger, I never thought they were a bad idea - I thought it made your finances easier. You could track your spending easier...or something. Riiiiight. I had four store credit cards by the time I was 20. Now, I never really took on a bunch of debt, but I could never resist when a sales associate asked if I would like to save 20% by opening up an account. Who doesn't want to save 20%?! So each time I went into a store and spent more than $5, it only made sense to open up a card. When I actually started paying attention to my credit report and my FICO score, I realized the more credit cards I had open, I was more of a credit risk. So I quickly closed all my accounts and have never looked back.

Until the holiday season....not only do you get money off when you make a purchase, but there could be extra perks! Free shipping, maybe a preview sale, free gift with purchase...UGH. I'm still sticking with what the pros say and my gut instinct and not opening a store account just to save a little bit of money in the short run, but it is awfully hard to do when you could be saving a serious chunk of change.

What do you think? I'm curious if any of you out there have a store credit card and think it's a good idea. What are your strategies for saving money during the holidays?


  1. I open the account, get the 20% off, and when the card arrives I never activate it and cancel it along with my first payment. Not sure what effect this has on my credit score though.

  2. That's a good thought, Dave - although, I thought the card was basically activated when you open it and you just get a more permanent card in a few weeks. If so, I think that means that card would count on your credit report. I'll do some research...