Closing Store Credit Cards

The coming holidays and the accompanying increase in shopping among consumers will most likely lead to an increase of the number of consumers applying for store credit cards.

Store credit cards are credit cards offered by major retailers to their customers. Instead of carrying the name of major credit card companies, these credit cards carry the store brand and are usually limited to that store for usage as well. With consumers increasing their shopping, store credit cards are going to be very popular these holidays. The reason why is that, store credit cards are usually offered by store clerks to consumers when they are making purchases. Saying “no” can be difficult for consumers as most stores offer very attractive incentives for applicants such as 30% discounts. This is a very big draw for consumers, especially those who are making big ticket purchases.

However, it has been noted by consumer advocates that store credit cards are not very healthy for the finances of any consumer. The reason why is that store credit cards carry relatively high interest rates. In fact, a few analysts have compared store credit cards to credit cards offered to subprime borrowers – borrowers who have low credit scores. Aside from that, store credit cards typically come with very low credit limits making it much easier for consumers to go over the limit or to seem credit needy to credit trackers as their credit to debt ratio can easily go up after a few purchases.

A lot of consumers who want to play it smart will probably open a store credit card during the shopping season and then close them when the season is over. So, while the number of store credit cards are going to see an up tick for this holiday season, a lot of those new card applicants may be closing down those cards after the holidays.

The general rule is that, opening and closing too many credit cards too quickly can have a bad effect on a consumer’s credit score. It is therefore not advisable to overload on store credit cards in the expectation of closing them down when the holidays end. A good way to close down a store credit card is to make sure that all debts in it are paid off before it is closed down. In fact, this is something that all store credit card users should do, whether they want to close down the card or not. The high interest rates that store credit cards bring should can be quite a challenge.

Once the debt is fully paid, it should be closed immediately. Consumers should also contact their issuer and ask that their credit report note that the account was “closed due to request by the account owner”.