The terms on some store credit cards seem too good to pass up. There is no credit check involved, the cards have no annual fee, and they advertise being interest-free for up to a year.

Of course, there’s always a catch.

If your favorite retailer is trying to entice you with a store-specific credit card that offers loyalty rewards, it is important to make sure you check the fine print. Even “interest-free” cards have hooks that will snag you if you don’t make your payments on time.

Be sure to read about all these hidden costs associated with a store credit card to avoid any nasty surprises.

Be Suspicious of Any Credit Card You Get Without a Credit Check

Cashiers are often tasked with getting you to sign up for a new credit card as you check out and pay for your items on it. They’ll entice you with offers such as “20% off on today’s purchase!”

If you can afford to pay your bills on time, a store credit card can actually provide great incentives.

The real trap of these cards is when you miss payments. The store is hoping people will accept the card on the promise of an intro period of 0% interest and pay their bills late expecting no consequences.

When you don’t pay your bill on time, you’ll quickly realize why they make the card so easy to get.

You May Not Pay Interest Immediately – But You Will Pay

A 2018 study by WalletHub revealed that 82% of store credit cards have a dangerous policy of deferred credit. If you don’t pay off your balance by the time the introductory period of 0% interest ends, you will then be charged retroactive interest on that balance.

In other words, not fully paying your balance means you could get dinged with several months to a year’s worth of interest all at once. That won’t be an insignificant amount either, as store cards often charge between 25% and 30% interest.

These deceptive terms are not communicated upfront, leaving many people overspending for months and expecting not to pay any interest.

Don’t be one of them.

Using a Store Credit Card Can Hurt Your Credit Rating

Even if you do routinely pay bills on time, store credit cards can still hurt your credit rating. This is because of their low credit limits.

Your credit score is negatively affected by how often you spend amounts that get close to maxing out your credit cards. In fact, it is recommended that you try not to spend more than 30% of your monthly maximum limit on each credit card to maintain a strong credit score.

Applying for a store credit card also results in a “hard inquiry” when the issuer pulls a credit report. This inquiry remains on your credit profile for 2 years and will cause a small dip in your credit score.

Can I Enjoy a Store Credit Card For The Perks?

Of course, if you do shop often at a retail chain, the perks the card offers may save you money in the long run.

Though you may also find that the discounts and rewards actually encourage you to spend more money at that store than you might otherwise.

If you struggle with overspending and managing your debts, RepairCreditQuick can help you. We can provide you with a free credit report and free consultation with one of our financial partners. We’ll work with you to develop a plan to be debt free.

Reach out to us today for your free credit report and to book a free consultation.