4 Ironclad Reasons Store Credit Cards Are Bad

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Applying for a store credit card may seem like a good idea. Maybe you think it’s a good way to build credit, you need it to buy a new appliance, or you want it so you can basically live beyond your means.  

But, store credit cards can be very risky, and I am here to identify four solid reasons store credit cards are bad and to encourage you to just say no!

Personally, I don’t believe in using credit cards anymore. Plain and simple, if we don’t have the money, we don’t buy it…we save for it.

But I wasn’t always like this. I am a recovering debt consumer. Throughout my adult life, I have had a whopping 27 credit cards (mostly store cards).  

I have owed over $30,000 to different credit card lenders for shit I couldn’t afford. I honestly can’t even tell you what all that money was spent on other than interest.

It took some serious sacrifice to pay my credit cards and the rest of our debt off, and after that, we vowed to never become a slave to the lender again.  

The rich rule over the poor, and the borrower is slave to the lender.

-proverbs 22:7 NiV

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Except I had a moment of weakness

In a moment of weakness, I relapsed and decided to open an Old Navy store card a couple weeks ago…all to save $75!

It was like an out-of-body experience. I watched myself in complete disgust as I applied for the credit card, inside screaming, what the hell are you doing?!!!

I had the cash in hand-we had budgeted the money to spend. But, the idea of saving 30% triggered old feelings and ways of thinking. 

I was saving 30% off my total purchase. What a deal…right?

I immediately regretted it. I opened a store credit card to save a measly $75. What the hell was I thinking?!!  

I felt dirty.  

I know that seems a bit dramatic, but after paying off a total of $276,000 over the past several years…you may be able to understand why I felt that way.

I was further disgusted when I opened the paperwork to see the complete disadvantage of having a store credit card. So, here you go the four reasons why store credit cards suck!  

reasons store credit cards are bad

The discount isn’t that great

The initial discount is usually pretty good when you open a store card, like the 30% off my purchase when I opened that Old Navy card. But, unless your purchase is a big one, the savings really isn’t that much and definitely not worth going into debt for.

Not to mention, that initial discount for opening the card is the best you’re going to get; after that, it’s a smaller amount that won’t save you very much in the long run.

You’re better off following the sales or waiting for a holiday sale. You can usually get better deals without opening a store card and going into debt just for a discount.

The rewards aren’t worth it

Unless you’re spending a ton of money, the rewards pretty much suck and aren’t worth it.

Most stores offer reward points if you spend a certain amount. For example, if I spend $100, I am rewarded 500 Old Navy points, which I can redeem for $5.

That’s it…a measly $5 “reward” for spending $100.

And this is what you get with pretty much every store card (the 27 I have had anyway).

Plus, most of these rewards and discounts can’t even be combined with any other offers.

reasons why store credit cards are bad

The interest rate is ridiculous

It really didn’t come as a surprise because I have had store cards before, but the interest rate on that Old Navy card was 25.99% (an that’s with a “excellent” credit score). Even if you get lucky with zero percent interest for a while, it will eventually go up crazy high.

Because that’s partly how banks make money…off credit card interest! According to Magnify Money, “Americans paid banks $121 billion in credit card interest in 2019.”

So, if you’re spending money you don’t have, you may not have the money to pay the balance off right away. And with a ridiculous interest rate like 25.99%, it’s easy to get into trouble and spiral out of control.

They lead to careless and excessive spending

A store credit card encourages you to spend money you don’t have. With all the rewards and deals they claim you’ll get, it’s easy to start chasing the rewards and store bucks by making purchases that aren’t well thought out. 

According to Credit Karma, all the promotions encourage you to spend beyond your budget.

Store cards’ special promotions and rewards programs can entice you to go beyond your budget and buy things you don’t really need.

-Tim Devaney (Credit Karma)

I remember many times overspending to get to that magical dollar amount to use my store bucks. Or, thinking I could spend more because I get that extra store discount…all while not having the money, to begin with.

In Conclusion

My credit card relapse could have led to a problem that could have quickly spiraled out of control like before. But because I realized my mistake immediately, I knew it wasn’t worth it.

Therefore, the card was paid off and canceled as soon as I received it. Because it’s not worth going back into debt for crappy rewards, discounts, and a ridiculously high-interest rate.

So, the moral of this story is if you’re thinking about applying for a store credit card, remember these four reasons store credit cards are bad and…just say no!

Do you have a store credit card horror story? I’d love to hear about it!

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