Talk to a debt counselor toll free:800-300-9550
Our Clients Rate Us Excellent
Based on 3234 reviewsTrustPilot Reviews
The biggest reason why you shouldn’t love store-branded credit cards is because of their outrageous interest rates. As noted above, Macy's charges a flat APR of 24.5% if you were to use this card to buy $1000 worth of merchandise and continually made just the minimum required payment it would take you more than 100 months to clear the debt and would cost you $1332.18 in interest – or $332 more than your initial balance.
Second, most store credit cards have very low limits so it's relatively easy to use up their full amounts. This will damage your credit score because of the effect it will have on your credit utilization ratio. This ratio is calculated by dividing the total amount of credit you have available into the amount you've used. As an example of this if you have $10,000 in total credit available and have charged up $3000 your credit utilization ratio would be 30%, which is considered to be good. If you were to get a store card with a $500 limit and use it all up your credit utilization would go to 33% and this could have a negative effect on your credit score.
The store credit cards can quickly lead you into debt. You might find it hard to pay them all off. Of course, you have the option to use credit card consolidation but the effect on your credit score might already have done enough damage.
Not so much
That great-looking discount you would earn from opening the store-branded credit card might not save you much more money than would the sales alerts and coupons you probably get on an everyday basis. We see newspaper ads with coupons for discounts on purchases at Macy's to the point where we've often wondered what its “normal" prices are. We took a gift card to our local Macy's last week to buy a sweater. Our sales associate proceeded to pull out some kind of supplement from under the counter with coupons that saved us money we hadn't even counted on. And that was without any sort of sales pitch. So we felt doubly good about her.