If a cashier at a department store finishes ringing you up and asks if you’d like to save 10% on your purchase by opening a credit account, what should you do?

“I shop here all the time,” you think to yourself. “It would be worth it to get discounts on purchases!”

Not necessarily- let us lay out the facts about retail credit cards for you.

Are retail store credit cards a wise use of credit?

A retail store credit card is a line of credit for use only at a specific department store or retailer. Best Buy, Khol’s, and Macy’s are all examples of stores that offer retail credit cards. They might have discounts or special offers to entice you to open an account with them. But before you do, consider:

1. These cards are often a tactic to get consumers to spend more with a specific retailer. If your purchase was twenty dollars more, you could qualify for a discount. A kitchenware set you would otherwise have never bought is 50% off with your retail store credit card. You may find that you end up with many things you don’t need and a larger credit card bill.

2. Opening a retail store credit account will count as a credit inquiry and appear on your report. Depending on how many inquires on your report and how close to each other they are made, this can harm your credit score.

3. Interest rates generally hover around 25% APR for these store cards. They can be more or less depending on the store, but you may qualify for credit cards you can use anywhere with better rewards programs and lower interest rates.

4. The optimal number of credit cards for FICO to index in your credit score is 3-5. How many credit accounts do you have open currently? In addition to adding a credit inquiry to your report, applying for a store card can lower the average age of your accounts.

While each individual has different needs and credit habits, Moran Law generally recommends staying away from retail credit cards in order to grow or maintain your credit score.