Would you like 10 percent off your purchase? If you're shopping for the holidays, you've either heard it or will hear it soon. That discount comes from taking on a store credit card and it sounds great, especially if you're racking up the bucks on a big spending day.
But before you go for it, weigh the pros and cons.
Some stores will give you 10 percent off that days purchase when you sign up for their card. They also throw in extras like returns without receipts and gift certificates.
Bankrate.com says co-branded cards can offer deals too. For example points on airline tickets or cash back.
The downside is higher interest rates.
It's fine if you can pay it off, but most of the cards have rates above 20 percent. Many also offer low credit limits.
Then there's the credit rating affect. Bankrate says the application counts as a hard inquiry on your credit report and can damage it a lot. It could mean 10-30 points per application.
And that inquiry will stay on your account even if you don't activate the card. Experts say people with a lot of store credit cards can be seen as risky borrowers.
Bottom line if you expect to take out a loan in the next year and are worried about your score, consider holding off on store cards. But if you pay off your card every month and use it to take advantage of promotions, it may be worth it.
