6 Reasons Not to Apply for a Store Credit Card

We have all experienced the uncomfortable situation of being offered a store credit card when we’re shopping. Whether you are buying groceries, consumer electronics, or some new home decorations, the clerk at the register will stop and ask if you’d like to get 10% off by signing up for a credit card right that very second. While it might be tempting to get 10% off your purchase that day, it normally is not a wise decision to get a store credit card. The only time I’ve ever signed up for a store credit card was when my wife and I were furnishing our home, we knew what we wanted and had the cash to pay for it, and the discount amounted to $160. Even then it was probably an average decision at best.


Why a Store Credit Card is a Poor Choice

Here are 6 reasons why getting a store credit card is a bad idea.

You Get One Unimpressive Discount

A 10% discount on one purchase is nothing to get excited about, especially when we’re talking about purchases of under $1,000. Sure saving $50 on a $500 purchase is nice, but is it really that significant of a discount? If $50 is going to make or break your purchase, don’t complete the transaction. It might be different if you could get consistent 10% discounts on every purchase, but that isn’t the case with major brand store credit cards.

You Have Better Credit Card Options

As mentioned above, a 10% discount on one set of purchases isn’t a great deal. You are much better off identifying a rewards credit card that fits into your spending and rewards profile. Getting 10% is nice, but getting 2% back on every purchase you make, automatic warranty extension, and other perks greatly outweigh a single store credit card.

You Risk Paying Interest

The store (and associated credit card partner) are willing to give you a 10% discount today because there are certain a percentage of customers will carry the balance of the purchase forward and pay interest on it. That $5,000 set of furniture at a 20% APR and a 5% minimum payment will end up costing you $2,500 in interest alone if you only paid the minimum payment. Even if they give you $500 off (10%) your purchase, they are coming out ahead by $2,000 — plus the profit on the items you purchased!

You are Tempted to Shop Again

To further enhance the company’s profit on your credit card, you will start receiving “exclusive” discounts in the mail that are tied to spending money at the store on your store credit card. They are making additional profit off of the purchases you make, even with giving you a discount, plus putting you at risk for paying further interest.

You Make a Rushed Decision

Standing in line with several people behind you waiting on you to get out of their way is not the time to be making a credit decision. Your credit score is one of the most important numbers in your personal finance life. The discount is tempting, but stick to your normal financial plan (you did save up for this big purchase, right?), and go on with your life.

Your Credit Report Gets Pulled

Whenever you apply for new credit at any financial institution, your credit is pulled by the lender to assess your creditworthiness. This negatively impacts your credit score by a few points. If you have several pulls in a short time frame, your credit score can take a serious hit. This can side track you if you are trying to rebuild your credit score. And you are taking a hit on your credit score for a small, one-time discount.

Photo by Stevendepolo.


By , on May 30, 2013
Kevin Mulligan Kevin Mulligan is a debt reduction champion with a passion for teaching people how to budget and stay out of debt. He's building a personal finance freelance writing career and has written for RothIRA.com, Discover Bank, and many others.


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  1. Used to sell the Macy’s credit card to unsuspecting shoppers. The interest rates were usury and most people had little idea about regular payments with the card. Likewise, they encourage greater spending and “loyalty” at that one store. That means missing out on better deals elsewhere.

  2. These are the exact reasons why I don’t apply for store credit cards. A one-time 10% discount really isn’t worth it in the end. Besides, if I’m going to get a credit card, then I’d much rather be able to use it anywhere I want and not just at that store. The APR on these cards are also generally higher than other credit cards that you can use anywhere. Great post!

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