Consumer Reports: Some store credit cards fail to score
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Back-to-school shopping can strain your budget, so when stores offer a deep discount for opening a new credit card, it can be hard to resist. The folks at Consumer Reports have done their homework and are saying in many ways that these cards don’t pull it off.
Consumer Reports says that store credit cards rarely reach the top of the class. For one thing, the interest rate is often much higher. On average, around 24% – well above the national average for credit cards in general, which is around 15%.
Applying for a new card can also temporarily lower your credit score. Every time an inquiry is made into your credit card account, it hurts a little and while that might not seem like a lot, it could be the difference between a good credit score and a bad credit score.
If you open an account, do not close it immediately as THIS also negatively impacts your credit score. The best thing to do is put the card away and not use it. If you’re looking to boost your credit, store cards — which may be easier to get approved — might be a good way to get your foot in the door. And if you shop at the store often, having the card could unlock special discounts or earn points.
But remember, with the high interest rate, it’s especially important to pay your bill in full…because if you don’t, it will undermine the purpose of getting the card in the first place.
And word to the wise, make sure you always pay that store credit card on time. If you only use it once or twice a year, it can be very easy to forget the due date.
Consumer Reports TV News® is published by Consumer Reports. Consumer Reports is a non-profit organization that does not accept advertising and has no commercial relationship with any advertiser or sponsor on this site.
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