by Barrett Burns
The holiday shopping season is now in full swing. Malls and other retail outlets have their decorations up and holiday music playing, enticing us all to shop for our friends and family. And as inevitable as hearing “Frosty the Snowman” is the chorus of checkout clerks asking shoppers if they’d like to open store credit cards to get a discount on their holiday hauls. Sometimes the savings are quite enticing, and depending on personal financial circumstances, they can be a good option. However, there are some issues to consider before signing on the dotted line.
To help you avoid a possible post-holiday shopping blunder, we’ve compiled some tips to help you make the right credit decisions this holiday season:
1) Before Opening a Retail Store Credit Card, Assess Your Ability to Make Payments
Many consumers take advantage of retailers’ discount offers in exchange for signing up for store credit cards. While these credit cards might be entirely appropriate for some consumers, a risk with any new credit account is that it can put pressure on your ability to make on-time payments on that account and others. Know what the interest rates will be on the new card and be sure the payment schedule is manageable. Don’t forget that missing even one payment can have a significant negative impact on your credit score. Depending upon your current credit score, a missed payment can cause your VantageScore credit score to drop 60 to 90 points, and it can take a year and a half to recover fully. (The VantageScore model’s range is 501 – 990.)
