Credit Card Apps-Don't Do It!

Document created by alexiab on May 17, 2016
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My best advice which I have had to learn the hard way is to not allow retail stores to manipulate you into opening a bunch of credit cards.  It seems everywhere you go you are offered 20% off here and 15% off there, gift with purchase or additional coupons for a later date if you just sign up for the store credit card.  Even when you argue with them that you do not want to take a hit on your credit they will tell you: "oh, it's a soft hit, not a hard hit."  I have learned that's not necessarily true.  Every time you apply for a credit card (wether you are accepted or declined) it dings your credit and usually lowers it a couple of points.  Recently I was even turned down for an auto loan with a particular company at a decent interest rate.  I was notified this via a letter from the finance company stating I was denied for the loan due to "excessive credit inquiries" and I had only opened two credit cards (both in retail stores) within the past 6-12 months!  My credit score is even really good but that alone caused some finance companies to turn away and that is because they realize how quickly you can get yourself into debt and sent to collections with retail store credit cards.

Also there are two other downsides to these cards: one is that depending on the store they don't always allow you to turn around and pay it off immediately just to get the 20% discount.  With some of them you have to wait for your card in the mail then pay it online as you are not allowed to pay it in the store.  When I went to pay it online with my debit card there was an additional $10 processing fee!  You see, they wanted the routing number and account number off of a paper check-as if anyone even uses checks anymore!  Creating difficulties in making payments is one of the ways they rack up interest rates on you and some of those interest rates are as high as 20% or more...so that 20% you saved in store for opening the card you just paid right back to them.....sneaky huh?

The other issue is that if you close your account as I did in the past that also dings your credit...a lot of people don't realized that but it's true.  My advice: save up for that item you want, if you don't have enough cash for it you can't afford it.  Good credit is built with paying off auto loans, not opening credit cards at Macy's.  If you only pay cash for your items you don't carry an outstanding balance collecting interest hanging over your head and that equals more money in your pocket later on.

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