NEW YORK – Mykail James, at 19, took out a store credit card with a $2,000 credit line while working at Victoria’s Secret during the holiday season. However, the inability to afford the payments ended up negatively impacting her credit score and financial decisions in the future, affecting her ability to access other types of credit.
Now a financial expert and creator of The Boujie Budgeter, James advises caution as the holiday shopping season approaches and stores offer credit cards to customers without much consideration.
Experts recommend being cautious when offered a store credit card. With outstanding credit card balances reaching $1.14 trillion as of August 2024, it is crucial to weigh the pros and cons before applying for store-specific credit cards, which tend to have significantly higher APRs compared to traditional credit cards.
Here are some recommendations from financial experts:
- Don’t immediately say yes to a store credit card; take time to review the terms and conditions
- Understand the details of the agreement, including interest rates and fees
- Do your research on the retailer before committing to a store credit card
If you do decide to get a store credit card, it’s important to pay your balance in full each month and spend only what you can afford to pay off within one billing cycle. Setting specific parameters for using your store credit card, like limiting purchases over a certain amount, can help you build healthy financial habits.
While store credit cards were once popular for building credit history, there are now other options available, such as secure credit cards, that offer similar benefits. It’s essential to understand the differences between store credit cards and Buy Now, Pay Later services, as both can impact your credit and financial well-being.
Overall, it’s crucial to approach store credit cards and other financial decisions with caution and understanding to avoid potential pitfalls and debt traps.
