Recently when filming a segment for 60 Days to Change, something became abundantly clear. We, as trusting Americans (or something like that), take financial advice from people we shouldn’t. We tend to take advice from anyone with a cash register and a credit card application. If you step back and think about it for a second, why would you let a teenager working a checkout lane talk you into opening a credit card? Yet, it happens every single day. Opening a store credit card rarely makes sense. Many people try to justify it by explaining that they are simply trying to save 10-15% on their purchase.
Stores know that you are most likely going to carry a balance on their card. Otherwise they wouldn’t offer them to you. They are playing the numbers game. They are counting on your lack of discipline. However, don’t try to prove them wrong by taking out a card, and then paying it off. These are the days of protecting your credit score. Opening and closing lines of revolving credit is a great way to destroy your score. Remember, retailers are not your financial partners. They are trying, in every way possible, to get you to spend your money with them. They don’t care about your financial life. Don’t think that the 10-15% savings from opening a store card is an attempt to help you. It is an attempt to take your cabbage.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.
I completely agree with not taking financial advice from checkout clerks. However, I’m not sure I agree with not having store credit cards. If there is a specific store that you buy a large percentage of your purchases from, then it can certainly make sense. For example, with 3 boys, we spend a fair amount of $s at Kohls. We buy all of their clothes there and get significant discounts by using their credit card. Also, Kohls allows you to pay off your credit card at the cash register. Thus, everytime we shop, we charge everything to our store credit card first and then immediately pay it off while still in line. You can do this at many stores. It’s an easy way to save 10-15% everytime you shop.