We’ve all seem them, almost every time we’re in a store at the checkout. “Would you like to sign up for a ‘xxx store’ credit card today? You can save $50 on your purchase today by doing so.” The offer always seems tempting. As we look at our purchases and consider what it’d be like if they were ‘free’ today, the offer actually seems pretty good. A reader commented on how he was in Home Depot recently and signed up for the Home Depot credit card. He was able to get $50 off his purchase that day and hasn’t used it since. To my horror, my wife pulled a similar stunt on me recently as well when she came home and announced that she’d opened a credit card at Loft. She was able to save $100 on her purchase and paid it off right there at the checkout. So I got to thinking, and I’m sure that some of you have as well, are store credit cards really a good deal or not?

Why do stores offer them?

Stores often put out their own credit card for the same reason that Delta Airlines or Marriott does. By tempting you with some ‘rewards,’ they bet that you’ll spend a little more with them and that you might even spend more than you can afford, and have to pay interest charges on it too. It’s win-win in their minds: more money for them and all they have to do is dangle a couple of free rewards that a good chunk of us won’t even utilize.

How does the card work?

Adding a store credit card is just like adding any other credit card to your wallet. They’ll run a credit check to make sure you are eligible and then it’ll be treated as a normal credit card. Some store credit cards you can use elsewhere (i.e. the Loft card has the Visa logo so you can use it elsewhere), whereas some you can only use at that store. You’ll then get a bill every month for the balance and if you don’t pay it off in full, you will be charged interest.

Will it affect my credit score?

Yes it will, and mostly in good ways. As it is just like a normal credit card, it can actually affect your credit. Part of your credit score is determined by the total amount of ‘credit’ that has been extended to you. By having more available, it shows that you are in fact more trustworthy. By paying your balance off in full and on time, it further demonstrates that you are a good steward of your credit. Both of these should increase your credit score by a couple of points.

Should I feel obliged to use it?

No. I’ve had a Belk Credit Card (thanks Mom for making me sign up) for probably 4 years now. I was buying a new suit and got like $30 off my purchase by signing up. I’ve used it twice since then. It just sits in my drawer at home. Even when I go to Belk nowadays I don’t even use it, because I’ve got my regular rewards credit card that in my mind gives me a good deal. If the card comes with a good rewards program then by all means do use it. However, most don’t offer that many valuable rewards for frequent use other than an occasional coupon. If it’s not worth it, certainly don’t feel obliged to use it. After a while, they might close your account for inactivity, but that shouldn’t matter to you because you already got your $50 off.

Is it really a good deal?

Not in my mind. I’ve got my Capital One Venture Card (Double miles on every purchase…thanks Alec Baldwin!) that I use for 99% of my credit purchases. It has the best rewards program out there that dwarfs any measly store rewards program. Sure, it doesn’t take too much trouble to sign up and make a purchase or two on a store credit card, so it wouldn’t be the end of the world to sign up for one or two. The $50 free cash offer just isn’t worth it to me. I don’t really want to be getting another bill every month in the mail and having to worry about something else to pay off and keep track of. I’d hate to worry about having another credit card out there that could get stolen and used fraudulently. I definitely run a pretty tight shift with my finances and try to keep everything to a minimum. For you, however, it might not be a hassle and you may just use it once. If it is a good deal in your mind (it’s hard for YoungMoneyFinance to say ‘no’ to free money), I’d say go for it, why not?

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