You're at the checkout when you get the pitch: Open an instant store card, and you'll save on whatever you're buying today.
Whether an on-the-spot credit offer is a trick or a treat depends on you, says David Jones, president of the Association of Independent Consumer Credit Counseling Agencies.
Typically, store credit promotions will offer 10 percent to 20 percent off the consumer's purchases the day the applicant opens an account, he says.
- Instant credit is a way for consumers to acquire more credit than they can repay, Jones says, and that's "one of the biggest ways to have your credit score lowered."
- Every time you apply for a card, your score can take a hit.
- You can use the card at one only retailer or group of retailers. (And carrying the same balance on a collection of cards is worse for the score than having the same balance on one or two cards, Ulzheimer says.)
- Rates on retail cards are often higher than they are on general-use cards.
The treat: If you're new to credit, sometimes these retail cards are easier to get, Jones says, but limit it to one or two cards.