5 Reasons to Say 'No' to That Store Credit Card

Getting that extra discount off your purchase at your favorite retail store sounds awfully enticing -- especially if you're shelling over a few hundred dollars -- but applying for the store credit card might do more damage than good. You may save a few dollars now, but signing off on that application means you could be losing a few points on your credit score and get stuck in a debt cycle. No matter how tempting the offer may be, resist the temptation to open up yet another line of credit.

Here are five reasons why you should just say "no" to that store credit card.

1. You'll lose a few points on your credit score.

Applying for new credit will have an impact on your score and the total points lost vary from person to person. The FICO website states, "For most people, one additional credit inquiry will take less than five points off their FICO score." Applying for a store credit card may not have a big impact on your credit score, but if you are on the borderline between good and great credit, you may need to be careful about how many new lines of credit you apply for before you head to the bank for a mortgage or a personal loan.

Another thing to consider: Applying for a handful of store credit cards within a short period of time can hurt your credit. More than a few inquiries can be a red flag in the eyes of a lender because all those new accounts can make you appear desperate to borrow money.

2. It's easy to miss payments.

When you open an account and charge that first purchase to the card there may be a delay in receiving your first statement. Since it's a brand new account, you may not even have had the chance to add it to your expenses column in your personal budget. It's easy to forget about making that first payment until you receive a statement in the mail, so be sure to keep an eye out for that bill. If the store offers online billing options, sign up for electronic statements so you can get an email alert when that first payment is due.

3. You'll be subject to higher-than-average interest rates.

A recent CreditCards.com survey found the average APR on credit cards from the largest retailers in America is 23.23 percent. This is more than eight points higher than the national average for non-store credit cards, which means you will be paying a premium to carry that balance forward. CreditCards.com reports that Zales jewelry store has the highest APR at 28.99 percent, while OfficeMax has the lowest at 9.99 percent.

4. Rewards programs can be complicated.

Stores want you to use your credit card to make more purchases throughout the year and may offer rewards points and other perks to keep your account active. However, it can take a significant amount of spending just to reach the different tier levels to actually enjoy some benefits of the rewards program. If you aren't shopping at the store frequently or making the bulk of your clothing or household purchases at a single store, chances are you just might not make the cut to the tier level that offers the most attractive rewards. Be mindful about your shopping habits and know that you will be marketed to even more aggressively -- in the form of email-only offers, invitations to private sale events and coupons in the mail -- as the holder of a store credit card.

5. You could end up feeding a credit card habit.

If you have a hard time resisting a sale and tend to pay with credit more often than cash, adding another card to the lineup might encourage you to spend even more. Couple the new card with a flood of exclusive offers and deals for cardholders only, and you may be setting yourself up for a heavy debt load sooner than you think. Saying "no" to that store credit card offer may be a positive step on your path to debt-free living -- or at least one less credit line to worry about as you get your financial house in order.

Sabah Karimi is a columnist for the blog Wise Bread, where you can find consumer tips like how to select the best balance transfer credit cards.