Saving 10% Could Hurt You

Would you like to save 10% today? That’s a common question at the checkout counter and at this time of year, in this economy it can be especially tempting. But, I am here as your voice of reason to tell you to resist that temptation.

You know how it works. The employee is required by management to ask every customer if they’d like to open a store credit card. They may even be prompted by a message on their register. It’s not personal; they are just doing what is required by their job.

It’s likely that you gave the items that you are purchasing more thought than you are this credit card. You might think, “10% could really help me out.” But the long line and your schedule might deter you. “Only takes a minute,” says the clerk.

You are not likely to read over the card details or consider comparing it to another comparable store during that “minute”. You probably won’t ask about the interest rate or terms and conditions. And the clerk is not going to explain all the details either. Their goal is to get you to fill out the application, move the line along and collect an extra dollar in their paycheck for each application.

Filling out the form doesn’t guarantee you’ll get the card. Your application is subject to credit check and approval. Yes, the store has more time to review you than you did in deciding to apply for the card.

And regarding your credit score; every time you apply for a credit card, approved or not, it’s a ding to your score. So that impromptu decision to apply for credit just brought down your score. If you are caught by that temptation at a few other stores, you are ticking away at your score more. Plus, most store credit cards carry a high interest rate. The exception can be co-branded cards that carry the Visa, Mastercard or Discover logos.

Remember this: No financial decision should ever be made without thinking through the consequences and investing the details.