Comments on: Five Reasons to Stay Away From Store Branded Credit Cards

By: Sara

Sara — Sat, 13 Dec 2008 05:26:21 +0000

Yikes! I just signed up for a Macy’s card. I don’t know what happen to me that day. I usualy have no problem saying “no.” I will have to cancel the card in 6 months to a year from now.

By: Frugal blog

Frugal blog — Tue, 04 Nov 2008 14:47:42 +0000

There is one more thing worth mentioning: as soon as you are a day late paying off a store credit card, the company reports you to the credit bureau and your credit goes down as fast as the stock market.

In addition: I was in a situation where I was not receiving my statements. Instead of calling me for the $10 payment that was left, they wrote me off as a ‘bad loan’, and it went onto my credit history.
Be careful!!

By: Cap

Cap — Sat, 01 Nov 2008 02:53:00 +0000

rudie: sorry about the confusion as I should have made that more clear. your first card opened in 2005 shouldn’t be hurting your score or credit base on what you’ve told me.

the reason why I mentioned having unnecessary amount of credit card accounts open is that some mortgage lenders view an excessive amount of opened credit cards account as a negative. this only applies to some, and you’ll need to do research prior to looking for a mortgage to see if this is an issue you need to address (6 months in advance preferably).

while 24% interest is ridiculous, since you’re not carrying a balance or using the store card, that’s a moot point. I wouldn’t close it unless its charging you an annual fee or some sort.

in the situation of a unused card, people advise against closing in two situation: account age, which you’ve mentioned, and its potential impact to credit limit to debt ratio. as the store card in question has a low limit already, and you dont seem to be carrying any high balances, I have a feeling even if you decide to close the account, there will be minimal impact on your credit score.

at the end, its your choice. should be spiffy in each case. hope this clears it up!

By: rudie

rudie — Sat, 01 Nov 2008 02:29:16 +0000

Cap,
I’ve read you say that unused credit cards hurt your credit score. I have two cards, one with a $1,500 limit and 24% interest rate, opened in 2005, and one with a $12,000 credit limit, 14% interest rate, opened in 2006. The first card has a zero balance and I haven’t used it since 2007. The second one I use all the time, (it’s a rewards card), and I’ve been paying off my full balance every month for the past 4 months, and plan to continue to do so.

So my question is, should I close the first card? If I close it, will it help or harm my credit score? I have no intention of using it (the interest rate is outrageous) and it’s a store card. The balance is also really low. But I’ve also read that it’s important how old the account is, and that’s my oldest account. So, should I close it? And if so, is there anything else I should be doing before closing it to get the most out of that account for my credit report?

Thanks!

By: moneyfunk

moneyfunk — Thu, 30 Oct 2008 19:51:35 +0000

funny you should say, “I would scream “No! Don’t do it!” silently”.

I hear people around me and watch people in the check out lines and do the same silent plea. It’s a different and genuine perspective to now be outide-the-box. And I am glad to be part of a growing trend of individuals getting theirselves out of debt.

By: James

James — Thu, 30 Oct 2008 15:31:50 +0000

You omitted reason #6 that consumers need to be aware of. Some stores have revolving credit accounts (which they do not tout clearly), and that means that the minute your charged purchases hit your revolving account, usually same day of purchase, the store immediately assesses finance charges. Revolving accounts do not offer grace periods on finance charges like the bank cards or other financial institutions cards do.

By: Cap

Cap — Wed, 29 Oct 2008 17:25:23 +0000

Well if you shop exclusively or a majority of your clothes comes from those select stores, then I can see the benefit in grabbing the 5% back. This is sort of a mileage can vary type of thing, but basically my point is to not just sign up for a store card for the quick discount they promote at the checkout line.

By: Andrea

Andrea — Wed, 29 Oct 2008 16:42:01 +0000

I have to agree with Jenny. I LOVE my Old Navy Card. Nearly all of my families wardrobe comes from Old Navy and it’s easy to pay it off. I’ve never had any shady dealings with them in the past 5 years or so I’ve held the card.

Aside from my ON card, my hubby and I each have Juniper Card. We love the Juniper card!

By: Jenny

Jenny — Wed, 29 Oct 2008 16:05:04 +0000

Totally agree with all of this in principle. Though I have to say that I love my Gap card since about 50% of my wardrobe comes from Gap/BR/ON anyway. Their rewards work out to 5% back, in addition to free shipping from all the websites (and free returns to the store). As long as you don’t carry a balance it’s a better reward than a regular cash-back card.

Other store cards? Pretty much devil spawn.