Some Thoughts on Store Credit Cards (2015.5 Update)


Store Credit Cards (such as co-branded credit cards of Macy’s, Victoria’s Secret, Banana Republic, etc.) Review

Strongly NOT recommended!

Many of us might have been recommended to apply for store credit card while shopping at like Macy’s, Victoria’s Secret, Banana Republic and so on. Generally, the bonus for applying that kind of card is a considerably high discount for the current consumption, like 20% off or so, and extra discount for future consumptions at that store. Many of us may not able to resist temptation, and finally applied for the card. However, according to posts at major forums I recently found, as well as my friends’ own experience, I personally strongly NOT recommend for applying for this kind of credit cards. There are three reasons:

1. Waste of Hard Pull (HP)

First, some tips for newbies. The store credit card is also CREDIT CARD. When applying for a credit card, bank will pull your credit report from the credit bureau and leave a Hard Pull, whether you are approved or not. Every Hard Pull will lower your credit score, decreasing your chance to be approved when applying for credit cards in the future. Applying for a new card, even a card with no annual fee, is not free of cost. So you should think twice before applying for a credit card: does this card worth a Hard Pull?

The earnings of most store credit cards are not worth a Hard Pull, unless you do spend a really huge amount. Otherwise, apply for a good credit card like CSP will bring you much more earnings than those store credit cards with the bank doing the same Hard Pull. Speaking of sign-up bonus, the highest sign-up bonus in “Best Credit Card Sign-up Bonus” can be as much as $800+~$900+. Thus, a conservative estimate of the value of Hard Pull can be $300 or more. Those cards with a sign-up bonus less than this number is not worth to apply for purely for the sign-up bonus.

Not to mention cash back for daily spending other than at the store. Compared to the indeed valuable cards in “Best Rewards Credit Cards for Everyday Use“, those store credit cards, to be honest, sucks.

2. Dealing with the small banks is very troublesome

Most of the store credit cards are issued by small banks, and dealing with small banks are usually troublesome. These banks always have a rather high APR, shorter repayment period, poorer customer service and so on. Also, I have heard many store credit cards being canceled by banks for being not used for one year. That way, your credit score is lost in vain.

3. The most important – it may ruin your credit record

Today my friend got a call, talking about address verification or so. Later, I ask about that, for curiosity. He said that he hasn’t received a previous applied store credit card, so the bank calls to verify his address. the moment hearing this, my blood freeze, and urged him to check the credit report from Credit Karma. It seems nothing happened. After getting home, I urged him to register to the website of that store credit card, and found he had been charged twice for late fee! And that is why I strongly NOT recommend to apply for store credit cards. To get the sign-up discount, some store credit cards may ask you to charge the current bill to that credit card. But you don’t get the card on the spot. For all sorts of reasons, some people won’t receive the card even after that. And they ignore that they have ever applied for a store credit card. When they recalled that after several months or even years later, their credit reports have been appended with some collections which generally need 7 years to remove. Because I’ve noticed there are many complaints of this kind in the forum, and today my friend in the move, I think it’s necessary to be careful that if you applied for a store credit card, please make sure that you have received the card!

We can easily avoid these conditions by checking our credit report frequently. Because Hard Pull for this kind of card are always done by small bank, we can distinguish it at a glance. Besides, checking our credit report frequently can also avoid losses caused by personal information embezzlement, because in the US, fraud and personal information leaking is a very serious issue. If checking credit report frequently, if there are some strange Hard Pull, New Account, or High Balance, you can dispute about it asap.

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