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Store credit lines are not the same as traditional cards

There is not one standard way for people who live in Fort Lauderdale, Florida, to handle credit card debt. Some use the cards for rewards and pay them off each month, while others use a credit line to fill in the gaps left by an insufficient paycheck. When it comes to store credit cards, the purpose may be a discount on a purchase, but there are other factors to consider, as well.

The discount may not be the only benefit of a store card. For example, many offer bonuses such as gift certificates, special sales and discounts or a relaxed return policy. They may also be easier to get than traditional credit cards, making them a possible method for rebuilding credit. While the cards could come with interest rates as much as 8 percent higher than the national average, those who pay off the debt every month would not feel the sting.

The potential benefits are not worth it, according to some financial experts. They point out that for those who do not pay the balance in full each month, the high interest rate and lower limits put consumers’ credit at risk. When the balance is more than 30 percent of the total limit on the card, it could bring down the credit score. A higher limit typical of a traditional card would allow the same balance to act as a credit builder, instead.

If consumers do not educate themselves on the differences between store cards and traditional credit cards, they are in danger of developing unmanageable levels of debt. Anyone who is struggling with overwhelming debt may want to consider the relief of a fresh start offered by a Chapter 7 bankruptcy.

Source: The Tampa Tribune, “Store credit cards: Financial experts say they are more cons than pros,” Jerome R. Stockfisch, Nov. 20, 2015

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