Negatives of Store Credit Cards

It’s becoming more common for customers to use a charge card for all their shopping needs. While using plastic is not necessarily a bad thing, there are major differences in the type of plastic that is being used. There are two main categories that cards fall into; major credit cards and retail store charge cards and the differences are huge. Understanding the differences between these two types of cards will help you decide which one is best for you.

Retail or Store Credit Card Most major retail stores now offer a credit card of some sort. Everything from grocery stores, pharmacies, furniture outlets and home improvement stores provide credit cards these days. What they offer is a card designed exclusively for use in that particular store or chain. More often then not, the cashiers are the ones providing the applications and in many cases processing the application on the spot through their terminal.

The Down Side of Store Cards The convenience of easy and fast processing makes it attractive to consumers. Add to that, the many discounts, deals and savings the store offers just for getting the card at that moment…very enticing! The catch is often lost in the trance of the deal. What the store gets, is a credit card holder that has agreed to a line of credit with a high interest rate. Just imagine how much profit they will make on 25%.

Far too often the store is not concerned about the condition of a persons credit score. They simply want the consumer to have their card and to spend. The attraction to be able to have the new desired item with no immediate consequences is often too much for many to deny. This enticing opportunity can be a huge stumbling block for compulsive shoppers and people with money management issues.

Susceptible Consumers One of the most disturbing aspects of retail charge cards, is they are targeted towards the vulnerable. In most cases, major credit card companies would deny the vulnerable consumers the stores go after. It makes little difference to the cashier pushing the application. Quite the contrary, the person pushing the application is often given incentives get people processed. They are not required to have any financial education to push the credit.

Regardless of what type of credit a person decides to utilize, it is always best to have a plan to pay off any balance in full to avoid interest payments altogether. The discount or perk you receive at the beginning is only positive if you prepare and prevent them from getting you at the back end with high interest rates and fees.

Major Credit Cards Major cards have qualifications that are much more stringent than any store card. These types of credit cards include Visa, Mastercard, Discover and American Express. They are more prepared to determine a persons’ ability to make payments prior to approving a line of credit. These cards also provide the consumer the ability to use the card at multiple stores throughout the world. A major credit card has the ability to replace any retail/store card. Consumers also have the opportunity to comparison shop among tons of credit card options that include, interest rates, special rewards, warranties and other special deals.