Wednesday, January 14

why store credit isn't worth the perks

I know, I can't believe what I'm saying either. Personally I have a wallet full of store credit cards that have been gathering dust for the last year, well except for the Gap one, but that is now in the protective custody of my SSBF (for newcomers, my super saving boyfriend). For years I was a staunch supporter of store credit, mostly for the perks. I was deluded by visions of free shipping and $10 off (after spending $500). I realized the error of my ways after a short, yet profound conversation with my SSBF. It went something like this:

Loo: "Let's stop at that shopping center, it has a Dick's (I had a giftcard) and an Old Navy. "
SSBF: "You don't have any money to buy anything."
Loo: " I have a giftcard! And if I spend just $31 on my gapcard I can keep my silver status, and we can get free shipping!"

I don't really remember his response, most likely laughter, but he continued to drive right past the shops. Honestly it was the best thing he could have ever done for me.

Now let me first give store credit the benefit of the doubt, since it did used to be one of my best friends. Its great in the event of a big purchase if they are offer no interest for some odd months. However you have to make sure you can pay it off before the grace period is over, because if not they will hit you with all the deferred finance charges, rendering the great deal useless. Otherwise, it leads us to the point of my post: why store credit isn't worth the perks.

Reason #1: The Interest is Sky High.
The average interest rate on my store cards is hovering right around the 20% mark. So let's think about this. I'm prone to carrying a balance, so if I buy a sweater that marked 20% off but let it sit as a balance on my card (with all the other clothes I bought that day) I'm technically paying full price, maybe more, for it on the back end. Burn. I always thought I was a smart girl, but that doesn't sound so smart at all.

Reason #2: It Cramps Your Style.
Something I noticed while I was cleaning out my closet was the amount of clothes I had from the stores who's cards I held in my wallet. I don't think its a bad thing to have stores you prefer. I do think its a bad thing when they become your end all be all. You don't even realize what you are missing out on when you limit your sights to the stores you have credit for. You also tend to binge more in those stores (on things you probably don't need) .

So whichever store card is your vice, I recommend you ditch it. Those perks they are giving you, you probably already paid for, twice.

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