Get Rid of Store Credit Cards to Help with Lowering Monthly Payments

Private retailer credit cards are what we like to call “store credit cards.” Retailers like department stores, tire stores, and gasoline companies many times run their own credit card programs. The attractiveness of this type of card is that you can many times purchase a high-ticket item and walk out of the store the same day because all of the credit approval is handled internally. But private retailer credit cards are no help in lowering monthly payments. Let’s look at a few facts about them:

Transferring the balances on your store credit cards to bank credit cards will help in lowering monthly payments. This is because store credit cards typically have higher interest rates—much higher than a classic bank credit card like Visa or MasterCard. Higher interest rates are a disaster when it comes to lowering monthly payments. Even the percentage where minimum payments are set is higher than with classic bank cards.

Even if you pay it off, it still remains as an open account. Of course if you pay it off it will be beneficial in lowering monthly payments but you should also close it at the same time. What happens many times is that people will have bank credit cards and then private retailer credit cards. The private retailer cards, even though they are paid off, still reflect as an open account. Too many open accounts can actually hurt your credit profile.

There is a tendency to sign up for a lot of private store label credit cards during seasonal promotions. You might be successful in lowering monthly payments throughout the year and then the holiday season shows up. And all those stores have all those great discounts if you just use their card. Plus, they make it easy for you to get a credit account and take home your purchase on the same day. By the time the holiday season is over, all efforts in lowering monthly payments on credit cards have been wiped out.

You are at more risk for identity theft with a store or private-label credit card. This has nothing to do with lowering monthly payments but it has a lot to do with protecting your identity and personal information. Think about where you usually sign up for a store credit card. It is at some table in the front of a store entrance at a major shopping mall. All sorts of strangers are walking by the table possibly looking over your shoulder getting information like your name, date-of-birth, and social security number. And what about that employee they hired from the temp agency to take applications for the store’s special promotion? A temporary employee acquired from a temp agency many times has not gone through the background scrutiny that a customer should expect of retail employees handling credit information. You don’t know if this temporary store employee is collecting your personal information to sell it to a third party and supplement income. With major bank credit cards, you usually fill those out at the bank or in your home.

Don’t buy gasoline on a private gas retailer credit card. If you want to throw a wrench in the machinery of lowering monthly payments, put variable expenses on your private retailer credit cards like those offered by oil companies. It is way too easy to rack up a large amount of debt by paying for variable expenses with a private retailer credit card.

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