Best Alternatives To Store Credit Cards
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It’s almost as predictable as death and taxes. When you go to check out of nearly any store in the mall, the cashier will ask if you’d like to apply for their store credit card. And typically, the offer is accompanied by a one-time savings on your purchases that day. Often, they even phrase it like, “Would you like to save 10% on your purchases today by applying for our store credit card?”
There’s no doubt that these store credit cards are successful, as who wouldn’t want to save money? But before you interrupt your shopping trip to fill out a credit card application, there are a few things you should know about store credit cards.
The disadvantages of store credit cards
Although they may offer you a small discount, there are many downsides to store credit cards. First, they tend to have very high standard interest rates. While the average credit card interest rate in America is about 15% APR, most store credit cards have rates between 20% and 30%.
Another problem is the promotional financing offers found on store credit cards. Many store credit cards have something called deferred interest financing. This means that you will owe interest from the date of purchase if you fail to pay off your entire balance before the promotional financing period ends. In contrast, when other types of promotional financing ends, you only begin to incur interest charges on the remaining balance, from that date forward.
And while many store credit cards offer some type of rewards, they’re generally not competitive with other cards. For example, they may only offer you rewards in the form of store credit, rather than cash back that can be used anywhere. Also, many store cards aren’t part of a larger payment network, so you can only use them in that particular store.
Finally, there’s the issue of the one time savings. Let’s say that you’re offered a 10% discount on your purchase of $500. This equates to a sign-up bonus of just $50. While significant, there are many more attractive sign-up bonuses available from other credit cards.
Here are some of the best alternatives to store credit cards: