Watch Out For Store Credit Cards

Do you have a [Macy's/Banana Republic/Best Buy/Insert Store Name Here] card?

You can't buy a DVD player or a dress at a national retailer without being asked if you carry the store's credit card. If your answer is no, the salesperson inevitably encourages you to open an account and get a percentage off the price of your purchase.

Such offers are tempting — you're going to buy the goods anyway, so why not open another charge card and save 15%? And you may even be eligible for other recurring discounts offered only to such cardholders.

But before you hand over your Social Security number and take on another card, know that you may be hurting your credit score. And if your credit score goes down, you could pay in a number of ways — through higher interest rates on loans and on insurance premiums.

According to Consumer Reports, having too many credit cards from retailers can cause you to be penalized by the credit agencies. And don't even think about cheating the system — that is, open an account to get the discount and then immediately cancel the card. Your credit may still be affected.

That doesn't mean you should ignore such offers altogether — just weigh the savings against the possible credit-score pitfalls. If you shop regularly at a store and using its charge card will result in savings over many purchases, it may be worth it.

By Marshall Loeb