Are Store Cards Worth It? Sears Cards and More

It seems that every time you shop at a store, the cashier asks you if you want to sign up for their store credit card. Store branded credit cards can offer you discounts and can be easier to obtain if you have less-than-stellar credit. However, they also have drawbacks, so you should think twice before you sign on for a card.

The Initial Discount
One of the biggest draws of the store branded credit cards is the initial discount you get the first time you use it. For instance, at the time of writing, you can get a $10 discount the first time you use a new Sears card. Sometimes, the offer is a certain percent off your purchase price. This can be a good deal when you’re buying a large item, such as a new appliance, or when you’re buying a lot of items for the holidays. That initial discount can mean big savings.

Ongoing Discounts
Most store credit cards also offer ongoing discounts to those who use the card. For instance, those who have a Lowes or a Target credit card can get a 5 percent discount any time they use their cards. Cardholders might also get advance notice on sales or additional discounts throughout the year. Sometimes, the stores send coupons to cardholders. If you shop at a particular store often enough, using their credit card for your purchases can save you a lot of money over the long run.

Interest-Free Financing
Interest-free financing can be a big advantage of using a store credit card. Many allow you an interest-free grace period when you make a large purchase. For instance, in December 2015, Home Depot is offering interest-free payments for 12 months on purchases $299 to $999, 18 months on purchases $999 to $1,998, and 24 months on purchases over $1,999. These types of offers change frequently, so you may need to time your purchase to fit the best offer.

High Interest Rates
Of course, there is a catch. Store credit cards often have interest rates in excess of 20 percent. If you’re only making minimum payments, you’re going to end up paying a lot more than you thought you were. Store credit cards work best when you plan to make the purchase and pay it off in full by the due date. This allows you to get any special discounts that the card allows you to qualify for, without having to pay a lot of interest on the purchase. You can typically make a payment online or in the store in addition to sending in your payment.

Juggling Cards
Another potential downside to using store credit cards is that you might find yourself juggling too many different cards. If you always say “yes” when the cashier offers you a discount for getting a new card, you’ll soon have 10 or more credit cards. Sure, you’ll get a discount when you buy things at the different stores, but you’ll also be trying to keep track of that many different payments. It’s easy to forget a payment on a card, which can mean a hefty late fee. It’s best to only have store credit cards from the stores you frequently shop at, and if you decide to get a lot of different store credit cards, you need to come up with a good system for keeping track of your payments.

Store branded credit cards are a smart way to save money at the stores where you frequently shop. However, it’s important to consider whether the savings you earn is worth the hassle of making payments and risking high interest fees.