Say No to In-Store Credit to Get Discount!

So, let's set the scene. You're holiday shopping at your favorite mall and you've got a laundry list of gifts to buy. Well, of course, everybody's pocket books have been hurt for awhile now so, you want to save money wherever you can. You start your shopping, spend 20 minutes in a store and make a decision about what you're going to get. As you approach the cashier, with your $40 gift, the peppy cashier asks you, "Would you like to open up a credit card with us to save 20% on your purchase today?" Now, at this point let's slam on the brakes!

Let's rephrase this question to what she's really asking you. "Would you like to get a credit card with us and hurt your credit over $8?" That's really more of what she is asking you to do. Why? Well let's look at a few reasons these cards are so damaging to you.

First and foremost, every one of these offers require the store to run your credit. Some of these stores give the impression that they don't or tell you that it won't hurt but in fact it does. One thing to remember about these individuals is that it's almost a certainty that these cashier and sales people are going to get some sort of financial kickback or bonus for getting you to open the card. As a former retail manager, sometimes, these kickbacks are substantial and almost any good manager has taught them what to say to get you to open it. So, keep in mind that every time you fill one of these out, you're dinging your credit.

Another reason, and one that few people think about, is that you have increased your available credit. Now normally, that's not that bad, but let's say you are spending $200 in a store and they opened you up with a $300 credit line (which is a common amount). You've instantly used 66% of your available credit which is well over the 30% usage rate that is optimal for a good credit score. The formulas used to grade your credit will only see you opened a card for $300 and at one time spent 66%. This doesn't speak well in regards to you demonstrating responsible credit usage so beware for the fact that more often than not, you're going to hurt yourself by using it just one time.

The last real threat that these cards pose to your credit rating is that when you open them, you either have to leave them open or close them at some point. This process of opening and closing credit cards is a very dangerous game to play. Opening too many cards or even one can hurt credit simply by giving more available credit to be used which some people view as increasing your liability at some point in the future. Closing credit cards is almost always a negative practice that will hurt your credit. So, if you're going to open a credit account, it is important to not have it be impulsive and unplanned to save a few bucks.

Holiday shopping can sometimes be financially stressful and there are ways to cut corners or save money, but opening a store card at the register shouldn't be one of them. These cards are easy ways for these stores to make more sales and take more money out of your pockets. The one time discount that you'll receive is not worth hurting your credit to the point that it can totally change credit picture. This credit picture shows people a lot about your financial habits and the score that comes with it totally affects your interest rates and credit worthiness as a whole. Don't let someone talk you into a situation that makes them money while you get hurt and find yourselves with difficulties for years to come.