Store Credit Cards: The Beginning Of The End?

Store credit cards have been a popular option among folks having trouble getting good unsecured credit cards from regular channels.  If you regularly shopped at a store, after all, a private label credit card can be very useful both in the short and long term.

Despite their low credit limits and often higher APRs, we actually recommend obtaining store credit cards as a way to raise your credit ratings.  Of course, you should take the same care using them just like you do with typical credit accounts to maximize those benefits.

According to recent news, though, store credit cards are experiencing some serious bumps on the road with the growing financial crisis in mainstream American society.

Default Accounts

Numbers have shown that charge-offs and deliquent accounts on store credit cards are increasing at an alarming rate, even more so than other credit card sectors.  Since store credit cards usually have smaller credit limits and have limited use (in-store purchases only), more consumers in financial distress seem to be choosing to default on them in favor of their other existing debt.

Less Spending

People have also been spending less in general (due to the economic scare). As a result, stores have been seeing less use of their credit cards even among regular customers.  In fact, almost all stores are now trying to offer some sort of rewards (like gift certificates and other concessions) to encourage better retail sales from their private label cardholders.

Getting A Store Card

With many stores trying to prop up business, this may be a great time for you to get a store credit card to improve your credit score.  Even if you don’t intend to use them all but once or twice, they will increase your overall available credit in possibly enough ways to create noticeable changes.