“May I help the next customer?”
You finally make it to the front of the line and dump your clothes on the checkout counter.
As the scanner displays the price of each item, you start having second thoughts about whether you truly need two new pairs of jeans … and shoes.
That’s when the salesperson hits you with the dreaded question: “Would you like to open a store card today? You’ll save 20% on your order!”
What’s a young shopper to do?
If you’re prone to shopping binges or are already struggling with credit card debt, signing up for a store account is probably a bad idea.
Interest rates on store cards are notoriously steep and can “quickly devour any point of sale savings you can get by using the card,” says Eric Dostal, a New York-based certified financial planner.
Opening any type of new credit card also involves a hard pull on your credit, which can send your score down. The drop is usually temporary, but you should be careful about how many hard pulls you allow, especially if you’re getting ready to buy a house or a car, adds Dostal.
If you pay off your credit cards every month and you’re a responsible spender, opening a store card could help you build credit and save money on purchases.
Still, the credit line on store cards is usually low, which means you won’t build as much credit as you would with a traditional Visa or Mastercard, explains Hank Mulvihill, a Texas-based CFP.