Credit Card Signups At Checkout – Worth it or not?

by The Happy Rock on October 26, 2008

As I was in the line at Home Depot with all the supplies to redo our bathroom, I did something I haven’t done in years   The seed was planted by an extremely helpful employee in the bathroom section and by the time I was about to check out with $400 worth of materials the frugal side of me couldn’t resist the 10% off savings of $40 if I signed up for a credit card.

After a short walk to the customer service desk, few tidbits of information, and about 10 minutes I had a new credit card with a $10,000 limit and $40 off my bill.

The weird part is that I felt a little dirty afterward.  We spent so long digging out from under 70k in debt that it feels crappy being in unplanned debt even if we pay it off when the bill comes.    It felt sort of like I cheated after going years with only one credit card.

Once I was able to separate myself from the situation, I could see that it wasn’t that big of deal and I saved $40, but the real question is “was it worth it”?  I would love to hear the readers thoughts on the matter.

Here is my take :

Hassle – It took an extra ten+ minutes to check out, plus the extra stress and hassle of making sure you remember to pay the bill and cancel the card.   Let’s say it took about an hour all told, $40 an hour is a pretty good return.

Risk – What risk you ask?  Risk that you get late fees and penalties.  Risk that you can’t afford to pay the bill when it comes. Risk that the card and company is reputable. Risk is one of the huge components of debt that people often overlook and don’t respect.  It is the part of debt that has people in foreclosure, bankruptcy, or buried under piles of interest.  Everyone says that it won’t happen to them, but it happens more often than people care to admit.

Card Quality – When signing up for a card at a check out counter, you give up your ability to research the card and the company.  Often the ‘check out’ cards are more dubious in quality than some of the major common cards like American Express Blue Cash.   ‘Check out’ cards are often willing partake in questionable practices that regular cards don’t like hidden fees, really high interest rates, fees for returns, short grace periods, etc. Turns out the Home Depot card has gotten terrible reviews in this regard.

One Drop Syndrome – Doing it once starts to break down your resistance towards debt and makes doing it again all the more appealing.  Eventually and usually without knowing you are doing things with credit that you wouldn’t have pictured just months earlier.

Credit Score – This one really shouldn’t matter too much, because a good score means that you can just get into more debt which you shouldn’t be doing.   A new hard pull on your credit does ding it for while and the new card may or may not effect it, but it is at least worth noting.

With all that said I really don’t think that I would do it again.   I am not saying that I will never do it, but I think the amount that I will save will need to be greater than $50 or more.  That’s my take.

Update –  The bill is paid and the card was canceled without a problem.  They did start offering me free coupons if I kept the card open, but I politely declined.

{ 12 comments… read them below or add one }

Gypsie October 26, 2008 at 10:16 am

Something that “they” dont tell you about store credit cards is that when it comes time to apply for a mortgage, store credit is looked upon as much worse than a regular credit card. i learned this the hard way when I purchased my second house. (my first house is in another state.) We would have had better credit if we had never applied for the store credit to begin with and we didnt even have a balance!!!


Amber C October 26, 2008 at 12:48 pm

Last year a friend and I shopped together the day after Thanksgiving and ever single cashier that asked her if she wanted to apply she did. Granted she probably saved about $200 – she way over spent. Then in February she and her husband applied for a mortgage for beach house and she was shocked that her credit score was lower than his. In the end it didn’t hurt her with the mortgage but she had no idea that her credit would be affected.


Clever Dude October 26, 2008 at 9:14 pm

I’ve only applied for one store card, and that was with Kohl’s. My greatest fear was that I had to repeat personal information out in the open with the salesperson. So I just asked to go around the counter and type in the information myself (which was MUCH faster anyway). I wonder how many people just shout out their SSN in front of a line of people behind them.


Michelle October 27, 2008 at 3:05 pm

I’d definitely avoid those types of offers. Any time you have your credit checked for a line of credit it deducts 3 points from your credit score. I have a pretty good score, luckily. But I have signed up for a few store credit cards. Especially when they have ongoing no interest offers at stores I know that I will use them frequently. I haven’t been able to regain those points back on my credit very easily though.


fern October 28, 2008 at 1:02 pm

You forgot identity theft risk. The more you put your personal info out there, the more you expose yourself to some store clerk copying and using your information.

Still, you did save $40. I would just pay it off quickly and then stic it in the freezer. In other words, don’t use it again. (But don’t close the account, since that will zing your credit.)


FFB October 28, 2008 at 11:31 pm

We did this with Macy’s when we bought our furniture. The savings were significant and we already had the money to pay it off. We rarely use the card anymore unless it’s combined with a coupon but again we use it knowing it will be paid off. One thing one needs to watch out for is that interest rates tend to be much higher on store cards than on bank cards.


stocks October 28, 2008 at 11:58 pm

Ugh, I try to stay away from ’em, they make it way to easy to shop there and then of course my debt climbs up. If I don’t have a card, then I’m more likely to spend money wisely for things that I need instead of on stuff that I want…


Beth Fork October 29, 2008 at 9:23 am

I heard everytime you apply for something like a credit card or loan they check your rating but just by checking your rating it makes it go down, is that right?


Will October 29, 2008 at 11:13 am

I love the store credit offers for the most part. I have signed up multiple times when the purchase price was significant. I would never sign up to save $10 or $20 but when it’s going to save be $50 of more I certainly sign up.

I never really looked at it as extra work. I have online billpay and it takes my about 2 minutes to add a new account. Additionally I often recieve 10% off coupons from both Home Depot and Lowes to use their cards.

Certainly don’t sign up for the cards if you are going to have trouble paying them off. If your credit is already great and it will save you money then why not!


The First Creditor October 29, 2008 at 3:54 pm

The thing about store credit cards is that if you are a sucker for them, you’ll be signing up left and right, dinging your credit score constantly, and building your very own collection of nooses. And someday, as innocent as your intentions may be, you might want to pull one from its collector’s case, “just to get a glimpse”, you reason, and once you have it in your hand, you say to yourself, “well, such a beautiful thing should be seen in all its glorious wonder… let’s just tie it to this overhead pipe which is above this wobbly chair just to get a look.” Satisfied with yourself, you sit back in said wobbly chair to endulge in a celebratory snack. As you bite into the crisp, cold apple, the legs of the chair give out, and you fall to the hard wooden floor, breaking your tail-bone. And that, my friends, is the thing about store credit cards.


fern October 30, 2008 at 5:05 pm

No, Beth. If YOU check your credit rating or score, it doesn’t affect your score or credit report. But yes, whenever you apply for a credit card or a loan, the lender will check your credit report to assess your risk. If you apply for too much credit, ir credit cards, all at once, it will hurt your credit. It’s hard to say exactly how much, as each of the 3 credit bureaus has their own formula for these things and it’s proprietary information.


cat November 4, 2008 at 3:31 pm

As for me I don’t like cards at all I prefer cash and the most important thing that I don’t like is to show my personal information


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