Don't Let Store Cards "Sleigh" You

While it may be better to give than to receive, it's also true that giving feels a lot better when you stumble upon an awesome sale, use a secret coupon, or nab an irresistible discount. And the feeling you get when you do all three in one purchase? Euphoria!

And just when you think the savings can't get any better, you might be tempted by the mother of all holiday savings segues, the store credit card. While you might be promised an additional 10, 20, or 30 percent off, plus additional savings in the future, don't get your tinsel all tangled before you understand exactly what you might be signing up for.

Unlike conventional credit cards, store cards can be easier to apply for and get approved for while providing exclusive discounts and promotions at that store or others owned by the same company. But be aware - they often charge higher interest rates than credit cards. In fact, store cards charge an average APR of 25.77%, according to a 2021 poll, so the cost of carrying a balance will quickly outpace your rewards potential. And while they might claim to have a zero-interest program, that offer might actually be a deferred interest promotion, meaning that if you have any remaining balance at the end of the promotional period, you'll be charged retroactive interest on your average daily balance all the way back to the beginning. Yikes!

Finally, be aware that when you apply for a store credit card, you typically get hit with a hard inquiry when the issuer pulls one of your credit reports. A hard inquiry can stay on your credit report for about two years and the inquiry can cause a small, temporary dip in your score.

While there certainly may be reasons that a store card can be advantageous, if your goal is to make it through the holiday season without racking up debt and tarnishing your credit score, you may want to cross "getting a store card" off your holiday list. And if you are truly serious about reducing your personal debt while maintaining or building positive credit, consider consolidating your debt with a personal loan. Telhio currently offers members loans with an APR that is considerably more appealing than the high percentage you will be charged with another credit card in your wallet.

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