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What Are the Pros and Cons of a Clothing Store Credit Card?

By Missy Nolan
Updated May 16, 2024
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A clothing store credit card can have many benefits, but potential dangers should not be ignored. This type of credit card can improve one's credit rating if the bill is paid on time, but the interest rate is often higher than that of traditional credit cards. Members-only discounts and reward programs might be available, but they might end after a few months or encourage the cardholder to spend beyond his or her means. A person should consider his or her current financial situation, as well as where he or she expects to be 12 months later, before committing to a clothing store credit card that offers deferred payment options.

Many consumers consider a clothing store credit card to be a good starter credit card. For someone who has no financial credit, store cards can help him or her increase his or her credit score and establish a credit history. This is important if he or she wants to get a car loan, house or apartment one day. One should make sure that the monthly payments are affordable before applying for a credit card, or his or her credit rating might be destroyed before it even had a chance to be built up.

The clothing store credit card application should be read carefully so that the interest rate is understood completely. Store credit cards are notorious for having higher interest rates than traditional cards from banks and credit unions. One should pay particular attention to fluctuating interest rates or rates that increase after the first 12 months. Some clothing store credit cards offer deferred payment options with no interest, but customers end up accruing interest for the entire time if the balance is not paid in full after the grace period. The applicant also should find out what kind of protection the card offers against fraud.

Discounts, reward programs and exclusive coupons are one of the biggest perks of store credit cards. Frugal shoppers can take advantage of these deals by paying their bill immediately after each purchase or by the end of the monthly billing cycle. Many stores allow card holders to pay their bill at the customer service area or registers, eliminating the threat of high interest rates and a higher monthly statement than was anticipated. It is important for consumers to make a budget and stick to it, because special discounts cause some shoppers to spend money that they would not have spent under normal circumstances.

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Discussion Comments
By Mykol — On Sep 28, 2012

One big disadvantage when it comes to clothing store credit cards besides the higher interest rate is fraud protection. I don't think you have nearly as much protection with one of these cards like you do with a regular credit card. They do work well as a way to get started building credit, but it still takes discipline to know how to use them correctly.

By andee — On Sep 28, 2012

If I can't pay the balance due each month on my clothing store credit cards, I try to at least make more than the minimum payment.

I notice that when I get my bill now it gives me a breakdown of how much I will be paying in interest if I only make the minimum payment. This was an eye opener for me. I realized that just because I thought something was a good deal, I was paying way more than I thought I was over time. This is good motivation to pay off as much as I can as quickly as I can.

I have the hardest time with these cards around the holidays. I don't always have the cash to buy gifts for everyone and find it very easy to just put in on the credit card. This is all fine until I get the bill in the mail the next month and realize how much I have really spent.

By honeybees — On Sep 27, 2012

I got myself in trouble with clothing store credit cards. It is so easy to open up an account, get a certain percentage off and buy what you want.

In the long run, if you can't pay off the balance every month, it isn't worth having these cards and you would be better off with a regular Master Card or Visa. For me, it isn't worth paying the higher interest rate.

By sunshined — On Sep 27, 2012

I try to limit the number of clothing store credit cards I have. I only shop at a couple of them on a regular basis, so figure these are the only ones I need.

I know these carry a higher interest rate than other credit cards, but for me, the personal rewards are worth it. Each time I use this card at one of the stores I usually get up to 15% off.

As long as I pay my balance every month, I am saving 15% off what I would have paid otherwise. It is the months where I don't have the money to pay the full balance this can work against me.

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