Are Store Credit Cards Worth It?

It’s almost impossible to walk into any retail store without being offered a credit card at checkout. While it may be tempting to apply for a store credit card to save money on your purchase, doing so may not be in your best interest. This article will help you understand what store credit cards are, and provide you with five reasons why you should think twice about applying for one.

What Is A Store Credit Card?

According to Experian, most retail stores do not offer their own credit card. Instead, they collaborate with major credit card issuers to co-brand the card by placing their name on it. In most instances, store credit cards can only be used at that specific retailer because these cards are not typically part of larger payment networks.

5 Reasons To Avoid Store Credit Cards

1. High-Interest Rates
   Most of the time, store credit cards offer interest-free promotional periods, which may seem like a good idea to help you pay off your balance over time; however, once the promotional period is over, you could be in big trouble. According to the Federal Reserve Bank’s Consumer Credit Statistics, the average credit card interest rate in the United States is between 12-14%. Unfortunately, for many consumers store credit card interest rates are on usually twice as high. In fact, some store credit cards have interest rates of over 30% APR! While at the register, it may seem like a good idea to save 15% on your overall purchase with the help of a store credit card, but if you are unable to pay off your balance in full every month, the actual cost of your purchases will be very high given the high interest rate.Potential Solution
   Apply for a low-rate Launch CU Visa Credit Card. New credit card holders will enjoy a 3.90% Introductory APR* on all purchases and balance transfers during the first 60 days of card issuance. The promotional APR will remain on those balances for a period of six billing cycles. Once your promotional rate is over, you can enjoy an APR as low as 8.90%.* Best of all, your interest rate will never exceed 17.50% APR!*
2. Higher Fees
   Most store credit cards do not have annual fees; however, they make up for that by charging higher fees and penalties for cash advances, foreign transactions, cash withdrawals, and late fees. If you utilize these features often, the fees associated with them can add up quickly and put a strain on your finances.Potential Solution
   Apply for a Launch CU Visa Credit Card and enjoy no annual fee,* no application fee,* no balance transfer fee,*, and no cash advance fee!*
3. Increased Spending
   From the store’s perspective, their credit card is a tool to increase customer loyalty and spending. Once you become a store credit card holder you will start receiving promotional emails and mailers for every new promotion the store has. You may even receive special coupons encouraging you to spend more on your store credit card. If you are trying to avoid excess shopping, applying for a store credit card may not help you achieve your goal.Potential Solution
   If your goal is to spend less and reduce your overall debt, avoid applying for a store credit card. Politely decline, and do not let the temptation of a discount lure you into making a poor financial decision.
4. Decreased Credit Score
   As a consumer, your credit score is very important to you. That’s why it’s essential to protect it at all costs. Every time you fill out a new application for a loan or credit card, your credit must be pulled to help the financial institution determine your creditworthiness. That means each store credit card you apply for can reduce your credit score. In fact, according to Nerd Wallet, saying yes to an instant credit card application can drop your credit score by as many as 10 points! If you have an excellent credit score, this may not concern you; however, if your score is on the borderline of fair to good, adding a new credit card to your portfolio could move you down into a lower bracket.Potential Solution
   Before you agree to apply for a store credit card, it’s important to understand what your score currently is. In addition, take time to realize the elements that make up your credit score so you don’t lose any of the hard work you have already put in.
5. The 0% APR Can Be Deceiving
   Sometimes retailers will try to get you to take advantage of a 0% APR offer for 6 to 12 months when you purchase appliances, furniture, or an electronic. Before you sign your name on the dotted line, ask yourself if this is a real 0% APR deal, or if it is merely a deferred-interest plan. If it is a deferred-interest plan, you could end up paying the entire amount of interest accrued since you made your purchase if you do not pay off your balance in full by the end of the promotional period. It’s also important to read through all the fine print, and look at specific details regarding penalties for late payments, and what your interest rate would be after the promotional period is over. Not asking the right questions or reading through the fine print on a 0% APR deal could end up costing you big money in the end.Potential Solution
   Before you agree to the terms of any 0% APR deal, make sure to read through all of the fine print, and determine if it is a true 0% APR deal, or a deferred-interest plan. If you are facing a major financial expense, such as the purchase of new appliances or furniture, consider a low-rate Launch CU Personal Loan.

Tips For Success

1. Understand that it’s okay to say no.
2. Think about what that instant savings could cost you down the road.
3. Understand the fees associated with the store card before you apply.
4. Trust your gut. If the deal seems too good to be true, it probably is.
5. Don’t act on impulse. Financial decisions take time and should not be made in a matter of moments at the register. Go home and think about it before you make an impulse decision.
6. Consider a low-rate Launch CU Credit Visa Credit Card to help you save money and pay less credit card interest. Apply online for a Visa Credit Card today!

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• Understand Credit Card Interest Rates & APR
• 7 Credit Card Tips You Don’t Want To Miss
• Improving Your Credit Score Can Save You Money
• Your Credit Score Can Impact Your Insurance Rates

*Introductory Rate and Balance Transfer Rate: *APR = Annual Percentage Rate. The 3.90% introductory APR for purchases and balance transfers will apply to transactions posted during the first 60 days following issuance of your card. The 3.90% introductory APR will be in effect for six billing cycles from the date of your first purchase or balance transfer. After the introductory period your APR will be 8.90% to 17.50%, based on your creditworthiness. Rates are subject to change without notice. Cash advances are excluded from the introductory APR. Foreign transaction fee of 1.00% of each multiple transaction in US Dollars and 1.00% of each single currency transaction. Credit cards require credit approval. See our terms and disclosures on the website for more details. Savings account required to open a credit card. Membership requirements include a $5 minimum opening deposit. You must live, work, worship, or attend school in Brevard or Volusia County to become a member. Federally insured by NCUA.