Editorial Policy

How to Respond to the Store Card Sales Pitch

Erica Sandberg

November 2, 2012

QDear Erica,

Something I’ve always been confused about is the different types of cards that I can get. At this juncture I just have one, a typical Visa, and that has been OK with me. I don’t use it all that much, maybe once a month or so. Do I need to also get a store credit card? I was at the Gap yesterday and the girl was super nice. They were having a big promotion, offering 25 percent off my items if I signed up for their store card, but I didn’t do it because all I was getting was a pair of underwear for $3.50. The cashier was saying that I could also use the card at Old Navy and other stores, so maybe I should have gotten it. What is your opinion? Thanks for your advice — Jessica

ADear Jessica,

I think retail credit cards can be just fine. As long as you get the right ones and use them the correct way, they can be a lovely addition to your wallet.Ask Erica

The major difference between that “typical Visa” card that you have now and those issued by retailers is that you can use the former just about anywhere, and the latter only at the store and its chain of affiliated businesses. Gap offers two versions of its card — the straight-up Gap credit card and a co-branded Visa card. Which one you get depends on your credit. Assuming you were to end up with the non-Visa card, you’d be able to use it only at Gap (obviously) as well as at Old Navy, Banana Republic, Piperlime and Athleta.

What are the advantages? Besides the initial discount that you’d receive when opening the account, many retailers also offer cardholders bonuses throughout the year. For example, you may be able to build points that you can trade in for extra discounts. You may get access to sales before the general public gets wind of them. Being a cardholder may also offer extra perks that others have to pay for, such as free alterations and shipping. You may even get a super sweet deal on your birthday.

Sound good? Wait up. Make sure it really is before going through with the application process. Go home and log on to the company’s website. Read all about the account, and not just the benefits, but the annual percentage rate (APR), any annual fee, grace period, late payment penalty and qualification standards.

In short, never apply for credit impulsively. It can be hard not to, especially when the salesclerk is standing there with an engaging smile on her face, extolling the virtues of the account. Resist, though, and explain that you appreciate her letting you know about the deal, but that you’ll get back to her. Obtaining any kind of new credit product should be a serious decision. It’s not a pack of gum that you can buy with few repercussions.

Every time you apply for a loan or line of credit, you add an inquiry to your credit report and your score is affected. It won’t decline dramatically, as inquiries make up only 10 percent of a FICO score, but it’s something to weigh when you’re trying to create a high score.

Also, will you really use the benefits that come with the card? If you shop at those stores frequently and don’t keep a balance (retail accounts are notorious for their high interest rates — often at least 21 percent), the perks can come out in your favor. Plus, you say you have only one card now, so adding another can help your credit score because it adds variety to the mix — another important factor in FICO scores.

Another thing to consider is whether having the new account will inspire overspending. If you run out of money and reach your other card’s credit limit, would you be tempted to charge an item that you can’t truly afford on the store card? Only you know the answer to that, so have a little heart-to-heart with yourself. Sudden access to hundreds of dollars can be awfully tempting.

Ultimately, if you’ll come out ahead with the special deals, the terms are acceptable and you can manage the credit line well, return to the store and say “yes” to the card. Make a large purchase to get the most out of that big initial discount, and pay it all off within 30 days. You’ll make that cashier very happy, too.