Beware of Store Credit Card Scams | CreditShout

Beware of Store Credit Card Scams

By Dan Rafter / March 4, 2011


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Store credit cards are rarely a good idea. Most times, you’ll be hit with a staggeringly high purchase interest rate. And most store credit cards can’t be used at other locations. That makes these cards rather inefficient. In almost every case, you’d be better off applying for a rewards credit card from a major bank, one that you can use at any location and one that usually comes with a far more generous rewards program.

And if this isn’t enough to convince you to avoid store credit cards, check out this thread on It shows just how easy it is for store cashiers to rip you off when you apply for a store credit card.

Here’s how it works: You go into your favorite department store. The cashier entices you to apply for the store’s credit card to receive an immediate discount on your merchandise. This is part one of the scam: Store employees are encouraged — sometimes required — to persuade customers to take out their credit cards. Employees often receive bonuses for convincing shoppers to sign up for these cards.

Remember this: The cashiers aren’t encouraging you to apply for their employer’s credit card because they think it’d be a wise financial decision on your part. They’re doing it because they want to get their bonus.

Now, if you do apply, there could be real trouble. Many stores offer various credit card types and levels. If you apply for one card, the cashier might fill out applications for you for all the other cards, too. It doesn’t matter if the store employee eventually cancels these applications. The employee still gets an extra bonus for convincing you to sign up for these additional cards.

This isn’t exactly harmless. Every time you apply for a new credit card, your credit score gets a ding. When you apply for multiple cards at once, it looks as if you’re desperate for credit and can’t land a card. This doesn’t do your credit score any favors.

And that’s too bad. Because your three-digit credit score is crucial today. Mortgage, auto and personal lenders rely on them to determine if they’ll lend you money and at what interest rates. A growing number of employers look at your score when deciding whether they want to hire you. And your auto insurance company might check your score when setting your policy rates.

In other words, you want your credit score to be as strong as possible.

CreditShout has long warned against all but the very best of store credit cards. They rarely come with enough perks, and with low enough fees, to make them worthwhile additions to your wallet. And now that you know that the friendly cashier might be lowering your credit score, can you think of any reason to apply for that store credit card?

We at CreditShout certainly can’t. So stick with the higher-end credit cards from major banks and financial institutions. They come with better rewards programs and you can use them at your favorite stores anyway.

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