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Pros and Cons of Department Store Credit Cards

Written by: Kristy Welsh

Last Updated: July 25, 2017

department store credit card is easy to come by and tough to turn down. You can save money on the spot, gain access to exclusive offers and other members-only perks, and have a fallback cushion for those times when you need a gift or a last-minute outfit and are otherwise broke. Having a department store credit card sounds great but are they really?

The answer is maybe yes, maybe no. There are pros and cons to having and using a department store credit card. If you are the type of person that will be tempted to "shop till you drop" simply because you proudly hold a Macy's card, it's probably not a wise move. On the other hand, if you pay off the balance in full at the end of each month and have not overextended yourself with numerous card applications already this year, a department store credit card could be a good card for you.

Pros of a Department Store Credit Card

  • Easy Qualification. Department store cards are relatively easy to get for individuals with poor or minimal credit. This is beneficial for consumers who need to establish credit, rebuild their credit, or improve their credit history.
  • Saves Money on Initial Purchase. Not only will you save money, many stores offer 60 or 90-day grace periods after the first purchase. You might be able to soak up that 15 percent discount for a few months after you sign on.
  • Store Specific Rewards Programs. In some cases, you which may be able to exchange reward points for gift cards or a direct store credit.
  • You'll be Privy to Members Only Specials. Being one of their card holders, you'll be notified of special sales dates, special promotions or other additional discounts on particular items before the general public is aware.

Cons of a Department Store Credit Card

  • Temptation to Spend Too Much.  We already mentioned the psychological issue that a department store card such as Macy's might tempt you to make unnecessary (or unaffordable) impulse buys.
  • High Interest Rates.  These cards rarely have reasonable interest rates and are frequently over 20 percent. All your "perks" will dissolve quickly if you aren't planning to pay them off in full each month.
  • Could Hurt Your Credit Score.  Another con is that the FICO scoring model can actually ding you for having these cards. If you are just starting out trying to build your credit though we still recommend these cards. Some credit lines on your report are better than none.

So the next time a store clerk tempts you with instant savings via a department store credit card, take a timeout and think through the pros and cons before making your decision. Or better yet, ask for the application and read it through before signing on - you'll be glad you did.