Personal Finance

Survey: 35% of Consumers Likely to Open Store Card for Holidays

With Christmas Eve coming up on Saturday, millions of Americans will be doing some last-minute holiday gift shopping this week. As they do, they’re sure to encounter offers from various retailers to open a store credit card. Oftentimes, these pitches will come with a discount or other perks that might appeal to shoppers in the moment but may not be so great in the long run. Despite this, a new survey from LendingTree shows that a significant number of shoppers are still interested in opening such retail cards this year.

According to LendingTree’s findings, 35% of Americans surveyed stated that they are likely to apply for a store credit card this holiday season. While that’s up from the 29% who said the same last year, it’s still down from 2020 when 44% showed interest in such products. This year, another 20% were neutral on whether or not they’d apply for such a card, which was on par with 2021. Interestingly, respondents with higher incomes were even more likely to consider a card this year, with just shy of half (49%) of those making $100,000 or more annually saying they were likely to apply for a store card. That figure included 22% who stated they were “highly likely” to do so.

While store credit cards may be popular among consumers, these products often pose issues. First, store cards tend to offer lower credit limits than other options. That might sound like a good thing for those who might be tempted to overspend, however, these lower limits can lead to larger utilization rates that can then negatively impact credit scores.

Secondly (and perhaps more obviously), some store cards can only be used at certain retailers and nowhere else. On top of that, the payment portals for some cards may not be as intuitive or useful as consumers may be used to. Perhaps as a result of these perils, 37% of those surveyed by LendingTree report that they’ve regretted opening a store card in the past, including 14% who have had repeated regrets.

Speaking to why shoppers may be considering these cards in spite of the downsides, LendingTree chief credit analyst Matt Schulz notes, “Life is so expensive right now, and everything seems to be getting pricier by the day. That’s causing many Americans to rely more heavily on credit to make ends meet, so it shouldn’t be surprising that folks would take a closer look at store credit cards, too.”

However, Shulz offered an additional warning to consumers who don’t intend to pay off their full card balance right away, pointing out, “If you ever carry a balance, store cards probably just aren’t for you because their interest rates are sky-high, even by credit card standards.”

For those who still aren’t swayed and plan on applying for a store credit card this year, there are a few tips that could come in handy. For one, although many store cards are “private label,” others do offer cards that operate on the Visa, Mastercard, and American Express networks. In these cases, the cards can be used at other retailers, making them a more flexible option. Moreover, these types of cards do tend to have higher limits than private label ones.

Next, be sure to consider whether or not the discount being offered is truly worth it — especially when you compare them to welcome bonuses of other credit cards. Finally, if one of the reasons you’re applying for a store card is because of a 0% financing offer, be sure to read the fine print of these offers as, in some cases, the interest is simply deferred, meaning that you may be stuck paying the full interest amount if you don’t pay off your purchases in the allotted amount of time. With these tips and warnings, hopefully you can finish up your seasonal shopping as wisely as possible and have a happy holiday.