Store credit cards causing credit issues

Many consumers opt to open a store credit card at the register after they hear about the benefits. These can include immediate money off, free shipping in the future and other perks. While it may seem like a good idea at the time, debt collectors and lenders may see that individuals who take out these cards often suffer financially. Employees at consumer credit bureaus, in particular, may have noted a correlation between poor credit scores and store-sponsored credit cards. While many people believe credit cards linked with a specific store won't affect their financial records, they are mistaken. Workers at bureaus may want to consider educating these people before they make a purchase that could affect them for years. Unforeseen credit damages Many store-sponsored cards come with a large interest rate, North Carolina's WRAL-TV reported. The source detailed Bloomingdale's, Macy's and Sears charge approximately 25 percent in interest for overdue balances, which is around twice what traditional credit cards call for. Consumers should also be told to read the fine print - according to WRAL, many of the benefits advertised by the shop require large purchases before the advantages can be received. CardHub reported a number of other popular stores have large interest charges linked to their cards. For example, Staples charges almost 28 percent, TJX and Office Depot call for nearly 27 percent and American Eagle and Express come with nearly 25 percent interest rates. Positive effects do exist Store cards can, however, be particularly good for a certain segment of the population. Those who have a poor or nearly non-existent credit history can use this type of card to build it up, WRAL explained. "Store cards have both good and bad effects on your credit. They're generally easier to get than bank cards, so they can help you build a credit history," Consumer Report's representative Greg Daugherty told the source. According to BankRate, stores are known to be more likely to approve a credit account for people with a lower score than banks or large lending corporations. The source reported if credit bureaus educate consumers on infrequent use of the cards, as well as proper payment techniques, it can add points to a credit score. Following these techniques could allow individuals to reduce the debt-to-credit ratio, which BankRate detailed to make up 30 percent of a credit score.