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Whether you shop at high-end retailers, department stores or discount chains, you’ve likely been confronted with offers for store credit cards. The retailers who push these cards claim that you’ll get excellent savings and promotional prices when you sign up for a store card. For many consumers, though, the promises seem too good to be true. Are store credit cards really a good investment? Do they offer long-term savings potential, or are they only as good as the initial discounts they offer? Here’s everything you need to know about store credit card offers and whether they’re worth your time.

What Are Store Credit Cards Anyway?

Store credit cards are offered by many different types of retailers. Instead of being issued by the store itself, such cards are generally issued by a bank that the merchant works with. Most of these cards are closed-loop cards, which means that they can only be used at the store where they were issued. That means you won’t be able to use them to make everyday purchases at other retailers or at gas stations, restaurants and the like.

The Pros of Store Credit Cards

While consumers are generally right to be wary of store credit cards, there are some reasons that opening a store card can make sense. The major benefits of store credit cards include

  • better approval odds than many major cards,
  • the ability to bring down your credit utilization ratio,
  • favorable introductory offers and discounts, and
  • the opportunity to build or establish a credit history.

Awesome Savings Offers

One of the biggest benefits of store credit cards is that they generally come with generous introductory offers. For example, you might get 30 percent off one regular-priced item and 15 percent off the rest of your purchases on the day that you open the card. That means that you can save a significant amount of money if you’re making a big purchase. However, it’s important to remember that these discounts are often paired with a high interest rate. That doesn’t mean you shouldn’t get a store credit card, but you should only make purchases on it that you can pay off in full every month.

Credit Score Benefits

Another big benefit of store credit cards is that they can be used to help you build or restore your credit rating. This is largely because it’s often easier to get approved for a store credit card than for an independent credit card. If you have a damaged credit score and are looking to rebuild, a store card can be a good place to start. The same is true if you’ve never had a line of credit before and are just starting to build a credit history.

When used appropriately, a store credit card can also help you boost your credit score by lowering your credit utilization ratio. That’s because a store credit card will increase your available credit line. If you only charge a small amount on the card and pay it off every month, you may be able to lower your overall utilization ratio.

The Cons of Store Credit Cards

Of course, the positives of store credit cards don’t necessarily diminish the drawbacks. Many consumers recognize that store cards can be as troublesome as they are useful. The chief drawbacks of store credit cards include

  • high interest rates,
  • the potential to get caught in a dangerous debt cycle and
  • low overall lines of credit.

Understanding Store Card Debt and Interest Woes

The awesome introductory discounts offered with store credit cards are generally offset by high interest rates. This means that you can get stuck in a serious debt cycle if you’re not able to pay the card off in full every month. Pair this with lines of credit that are often low, and you run the risk that you’ll both increase your overall debt and drive up your credit utilization ratio.

Should You Apply for a Store Credit Card?

Applying for a store credit card can be a great way to snag savings right now. However, it’s important to thoroughly evaluate store offers before applying for one of these cards. If you’re able to use is responsibly, a store credit card offer just might be worth it.