One of the most annoying things about shopping is being incessantly offered of a store credit card in exchange for a 10–15 percent discount on that day’s purchases. The money savings may sound enticing, especially for a credit card affiliated with your favorite retail store, but store credit cards aren’t as great as they seem. Sure, there may be some perks with a particular store card which are tempting. However, in the grand scheme of your credit history, the drawbacks of store credit cards generally aren’t worth the short-term savings.
01 – Retail Credit Cards Usually Have Low Limits
Store credit cards typically start you out with a very low credit limit—somewhere between $100 to $500, especially if you have poor credit. Your purchases could easily put you at a higher credit utilization–the ratio of a credit card balance to the credit card limit–than what is beneficial for your credit.
Any credit utilization over 30 percent is too high and will negatively impact your credit score. On a credit card with a $100 credit limit, that means you should never charge more than $30. In many stores, that’s barely a t-shirt.