There are many retail stores that entice you into signing up for their credit card by offering an immediate savings off your first purchase with the card. This enticement is usually a dollar amount off or percentage off but is the savings truly worth all the entrapments and potential harm to your credit score? Additional promises of advance notice of sales, future percentage off coupons and card holder sales further sweeten the offer. If you bite, are accepted and end up with a low credit limit, you run the risk of harming your utilization ratio (the ratio of your available credit to how much you owe). Most retail stores make it extremely convenient to charge on your new card before you actually receive it just by obtaining some of your personal information.

Another drawback to most store credit cards is the high interest rate usually 20% or more. This is typically much higher than a generic credit card which may be used elsewhere. With an interest rate this high if your card balance is not paid in full even for one month the initial savings for obtaining the card is wiped out. However, if you are disciplined and pay off your credit card each month, the initial savings might be worth obtaining the card, but only if you pay off the card without having to pay any interest.

Other factors which should be taken into consideration when considering obtaining a store credit card are your loyalty to the retail store and how often you frequent the store. Many times there are various ongoing enticements, such as a certain percentage off or extra loyalty reward points for using your store card to pay for your purchase. All of these additional benefits can reduce your overall cost of a needed purchase as long as you use the card wisely. Taking advantage of the benefits of using your store card while not paying any interest charges can certainly make the store credit card beneficial. Only you know your ability to be disciplined enough to pay off the store card each month so you pay no interest, therefore only you can evaluate whether the sign-up bonus and ongoing enticements are worth the temptation of using the card on a regular basis.