Department Store Credit Card for People With Credit Problems

Buying items you cannot afford can worsen your credit woes.

Many department and retail stores offer credit cards to qualifying consumers. Users of these cards can make purchases at the store, and pay off the purchase over time. They work much like regular credit cards, allowing you to buy things even if you do not have all the money, and charge interest on your balance until it is paid off. People with credit problems should be wary of opening a department store credit card.

Problems Qualifying

Qualifying for a department store credit card is generally easier than qualifying for a regular credit card. However, if you have credit problems, you might not qualify to open a department store credit card. The store runs a quick credit check when you apply, and if your credit report is poor, then you likely will not be approved. This can be embarrassing and frustrating, and your credit report will take a slight hit when the store runs a credit check. If you are in a lot of credit card debt, behind on payments or maxed out on other credit cards, you have a slim chance of getting approved for a department store card.

Continuing Bad Habits

If you are approved for a department store credit card, it still might not be a good idea to open the card if you have credit problems. Credit problems result from poor spending habits, loss of income to pay your debt or situations beyond your control, like unexpected and expensive medical bills. A department store credit card is probably not a good idea if you have credit problems due to overspending or irresponsible money management. It can lead to more debt and can reduce your credit score even more if you spend on the card without paying it off quickly.

Disadvantages

One major disadvantage of a department store credit card is that you can only use the card at that store or retailer. Because of that limitation, it might make more sense to apply for a regular credit card, which you can use almost anywhere. Other limitations on department store credit cards include low credit limits and high interest rates. It is easy to max out or even overextend your card quickly with a low limit and a high interest rate.

Advantages

There are a few advantages to opening a department store credit card if you have bad credit. First, it may be the only card you qualify for, and if you use it responsibly, you can improve your poor credit score. Also, many department stores offer discounts or even free merchandise when you pay with the card as opposed to cash, check or another credit card. Responsible usage of a department store credit card can also teach you good credit card habits for the future, so you never have credit problems again.

References

• Rewards Cards: Department Store Cards
• Woodridge: The Advantages and Disadvantages of Using Department Store Credit Cards