Five Big Downsides to Store Credit Cards

A cash register isn't just a place where you pull out your wallet to get cash or a credit card anymore. At a growing number of stores, it is becoming a place of opportunity to put some of that money back, in the form of instant discounts, shopping perks and savings that may otherwise pass you by -- if you only sign up for the store's own credit card that the sales clerk is soft-selling you.

Sure, a 15% discount sounds fine, especially if you arrive at the register with an armful of items. But don't be wooed by the initial discount the plastic gets you on items you buy the same day you open the account. The instant savings are rarely worth the risks.

Here are five reasons to stay away from proprietary credit cards, outlined by CreditCards.com, a leading consumer resource for credit card information.

1. While the biggest benefit is at the beginning of the relationship, when you typically get a typical 10% to 15% discount on same day purchases, most store cards go unused after the initial transaction.

2. Private-label credit cards generally have much higher interest rates -- typically in the 20% range -- than general purpose cards, which charge an average 13% to 14%.

3.Though they are easier to qualify for than major credit cards, and may tempt consumers who are trying to build credit, a wallet full of store credit cards, in addition to several major cards, can quickly degrade your credit by causing you to have too many open accounts.

4.Purchases with store cards can deplete resources you would have otherwise used on reward-points opportunities from general purpose cards.

5.In event of a purchase dispute, store credit cards don't have an association to act on behalf of the consumer.

Consumers who sign up for store credit cards may also end up on marketing mailing lists or find that their personal information compromised. Large chains such as Wal-Mart routinely sell data to third parties, which in turn try to offer you special promotions or services. Unsolicited offers like these may be an annoyance, especially if you're already flooded with offers you don't want.