Credit Cards

We have all probably been through this at some stage. You are at one of your favorite retail outlets for new clothes and you get to the check out and the sales assistant asks you if you want to sign up for their retail store visa credit card? They then go on to explain that if you do you will save 15% on everything you purchase that day. It sounds great, doesn't it? I mean who wouldn't want to say money? So you decide to fill out the form and then leave the store with your purchases.

Although the initial saving of 15% is a good deal, you will find in the long run that it was not such a good deal after all. Today many people will have some sort of retail credit card and it is big business for the retailers as they make a lot of money from them. But having such a credit card also has its share of problems as well.

1. Interest Rates The fact is that retail store credit cards have interest rates from 20 to 30% which is way higher than any bank credit card (10-15%).

2. Credit Score Rating Such credit cards can have a negative effect on a person's credit score. The credit bureaus use a specific formula in order to calculate a person's credit score and they will calculate retail credit cards differently from bank credit cards. So by having a retail credit card in addition to other bank credit cards it could actually make you a bigger risk to credit bureaus. This in turn could then lower your credit score. Also having too many credit cards can provide a negative effect on your credit score.

3. Even if you open a retail credit card account and then do not use it you will find this can still have a negative effect on your credit score with credit bureaus.

4. Many retail stores will often take personal information from you and then share it with other third party companies. They do this as they make money from it. What happens is the other companies by such lists from retail outlets and then will send those people on the lists all sorts of offers in the mail or to an email address if one is provided.

So it is important that before you sign up for any sort of retail store visa credit card that you consider whether it really is necessary? Also whether the savings being offered are worth it in the long run.