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How I Ripped People Off With Store Credit Cards

In high school, I worked after school and on weekends as a cashier at a large retail chain. Despite my working less than half the hours of my full-time counterparts, I consistently managed to reach the top of our weekly credit card sign ups contests.

Store Credit Cards Are Bad

Most people knowledgeable about credit scores and credit cards would advise you against signing up for a store credit card. I am one of those people.

Store credit cards are bad for many reasons. Here are some of the biggest:

  • Credit score goes down from a new inquiry and average age of open credit lines decreasing, which can cost you money when applying for loans in the future
  • The new credit card gives you an outlet to spend more
  • If you do not pay it off right away, you will pay interest on a purchase that you might not have otherwise
  • Store credit cards generally have higher interest rates than other credit cards

How I Got People to Sign Up

I was 16 when I started working in the retail store. By the time I left when I was 18, I had learned a lot about selling credit cards, but knew little about credit. I just knew that if I signed people up, I would get a free DVD or be entered into a contest for something bigger.

My store offered a 10% discount to new credit card customers if they charged the purchase to the card. I didn’t waste my time offering a store card to someone making a $12 purchase, but I always offered it to someone making a purchase over $100.

I had logic in that decision. I was scored by my company on transaction time, so it was never worth wasting time unless you had a good prospect in front of you. Because of a basic understanding of marketing psychology, I knew that people in Greenwood Village, Colorado did not care about saving $3 when picking up a few things. However, when someone was buying all new bedroom decorations or filling the cupboards of a new kitchen, I could easily talk them into saving $10, $20, or $120 dollars (that was my biggest).

I did not ask people if they were interested in saving 10%, as most cashiers did and continue to do at that store. Most people don’t care about 10%. However, people do care about $34 on a $340 purchase. I always quickly moved the decimal and told them exactly how much money they could save. It almost always worked like a charm. My great performance either had something to do with that technique or my stunning good looks; I don’t think we will ever know for sure…

This Was a Huge Benefit for My Company

If you saved 10% on a $100 purchase and paid the card off right away and never used it again, you were a rare customer that cost the company $10 with no long-term gain. However, many new credit card customers would only pay the minimum. If you took one year to pay off that purchase at our rate (currently 22.9% APY), we would turn that 10% savings for you into a 12.9% profit for us. In that case, the $10 savings for you turned into a $12.90 cost. That is not huge, but if you use the card regularly, it adds up over time.

Late fees, interest, and the loyalty gained from holders of the store card made the 10% discount more than worth it.

What You Need to Know

Retail stores don’t do anything to help you, they do things to make money. The 10% off at the Target register, the mail coupons from Kohl’s to credit card customers, and the free drinks and candy at Walmart are all temptations to get you in the door, get you to spend more money, and make more money.

When you are offered a store credit card, do the real math. Will you pay it off right away or will you pay interest? Are you planning on a new car or home loan in the near future? Are you trying to build your credit score? Do you care if it falls?

Store credit cards are not a cut and dry “yes” or “no” for everyone, it depends on your situation. In most situations, you should not get the card. However, if you own a home, have a good card, have a large savings account, and don’t care if your credit score falls a few points to save some money on a large purchase, it might be a good idea for you. To get an idea of what you have going on right now, check out Credit Sesame for a free credit score and analysis.

Your Stories and Questions

Have you ever taken a store credit card and regretted it? Do you have a store card that you love? Do you have any questions about store credit cards (or credit in general)? Please share and ask in the comments.

Image by stevendepolo

61 thoughts on “How I Ripped People Off With Store Credit Cards”

  1. I always laugh at the people who ‘run the script’ and try to sell me the 10% on a $10 purchase. At least you had the sense to not bother in those circumstances.

    1. Even when I was 16, I was able to figure out what was worth my time and what was not. Money talks, percentages don’t. I never saw anyone pass up $50 off their purchase.

  2. I can’t believe people signing up for store credit cards. You save a few dollars on your first purchase, but its still line of credit and its still a Credit Card. If you are not going to pay it off every month, you don’t need the store credit.  

    1. The only store card I have considered recently is Kohl’s, but I know I would pay it off in full every time I use it. They offer regular coupons which makes it better than the one shot deal.

    1. Most people have never been on the other side of the register, so they don’t know how it works. I am happy to share stories where I can.

  3. We don’t have a store card at this time. It is always tempting to save 10%, but usually it’s not worth the hassle. Our purchases are pretty small in general so 10% isn’t much to get exited about. 

  4. I have a best buy charge card (not credit card), and use it for many of my electronics purchases.  I didn’t get it for some discount  but rather because I needed to replace my laptop and decided to go with a full-blown desktop system but didn’t want to pay for it right then and there.  I ended up getting 24 month of interest free financing which was fine with me as a)I knew I wasn’t going to be needing to apply for any kind of loan in the near future, and b)I would rather have the money earning interest in my savings account rather than losing that compounding power (this was when online accounts were still paying 2-3% APY).  I plan on using it when buying my tablet later in the year too.  Don’t regret the decision one bit as it was my decision to get the card, and not a case of falling for the sales pitches.

    1. Most people don’t put as much thought into it as you Eric. It sounds like you did your research first and made a smart decision rather than going for the quick discount on a whim.

      1. I also learned very early on, having used to work at OfficeMax what crap some people will throw at people to get them to sign up for a card.  And don’t even start with the extended warranties–pure profit for the retailers.

  5. I used to have them all: Best Buy, JC Penney, Zales. Now I have none. Reminds me of when I was in college and worked at Blockbuster Video. They started selling DirecTV and as a reward, they offered $25 per signup. I sold so many that I wasn’t even focusing on video rental, just pushing the satellite. 

    We ended up in the top ten stores nationwide for DirecTV sales, but it was costing them so much they dropped the commission to $10 or something like that. We lost interest quickly.

    Reminds me of all the time I would spend crafting the message to get to the heart of what the customer wants right now.

    I like the way you used your own experience and “came clean” for your readers. Great post.

    1. It was a long time ago, but I will never forget the excitement of getting a free DVD every week. Motivating a high school kid is not hard. Having a high school kid that is good at sales can be dangerous for consumers.

  6. The only store credit I have is Banana Republic card. I applied for it buying suit shich saved me a good amount of money. I have yet to cancel it. I should soon.

    1. If there are no fees and you never use it, I would not cancel it. Closing the card will lower your average account age and credit score. Once you have the card, as long as it doesn’t cost anything, you should keep it open as long as you can.

  7. Good article – I always deny the credit cards from stores, but I try to do it politely.  Sometimes they can get a little rude, but a simple “No Thanks” does the trick.  Interesting to hear from an insider.

    1. We had one cashier (my competition for first place) who was very pushy. I was always friendly and polite. It was not worth losing a customer who did not want the card anyway.

      1. Hrm, I can’t really remember.  I don’t think I really pushed on it too hard.  I actually hated asking people to sign up for it, because it would hold up the line and take them forever to fill out the application form.

  8. They pushed the store card really hard when I was shopping at Victoria’s Secret. I repeatedly said “no” and finally I got a little hostile with the cashier when she wouldn’t back off. 

  9. I did the 10% about 100 times and never used the card again. I even resigned up years later for another 10%. Someone tried to rip me off in a wedding photography scam. Everyone is trying to make a buck even if it’s not an honest one.

        1. It sounds like you know what you are doing. Good job building strong credit, saving money, and not losing out by using the cards irresponsibly.

  10. Hilarious! I once signed up for an Amazon credit card through chase to save the $25 or $30. I used it that once, paid it off, and it has been sitting in my wallet for years (unused). 

        1. As long as it doesn’t have any fees, it is better to keep them open once you have them to increase your average account and and lower your debt ratio as FSYA pointed out.

  11. I’ve always heard that discounts are better as dollars and cents than they are as percentages for the exact same reasons you’ve said.   I guess the urgency factor has a lot to do with it, too.  Basically sign up now or never.

    I’m not loyal enough to a particular store – nor spendy enough! – that a store card makes sense for me.   If in the event I have piled a bunch of stuff on the counter to the point where it would make sense to get to a card, I’m usually so ready to be out of the store that nothing is going to keep me from getting out.  That said, the $120 discount might have gotten me.  

    I’m curious – did anyone who could have saved more than $120 ever turn you down?  

  12. Great post.  I pay off my store cards on time.  They must hate me.  On the other hand, you were a pretty slick operator at such an early age.  Were you a psych major?

    1. Nope, finance major. But I know enough about finance to quickly respond to doubts. My time working at a camp helped me learn to read people and put them at ease.

  13. I have a JC Penny card…. but I pay it off before I leave the store.  I use it for future discounts and coupons.

    1. That is the way to do it. Take advantage of the discounts and pay it off. You are a “deadbeat” that doesn’t pay interest.

  14. Giving the discounts as amounts rather than percentages was very smart! It makes the customers feel as though they are losing out on that money if they don’t sign up. 

    I’ve done that before, but always paid it off in full. My problem was regular credit cards…which I am still paying for today. 🙁

  15. I used to have A LOT store  c/c and I have to admit (I am embarrassed to say it) that I carried balance! Can you imagine all the money that I wasted on interest! I finally got rid of them. Now I keep only a selected few and pay them off immediately! great post! 

  16. I do not have any store credit cards, personally.

    Once in the past, years ago I got one retailer credit card. Probably got some decent discount up front. Of course, I recall that it was very difficult to try to cancel the card. It seemed like there wasn’t a straightforward path to doing so, which was annoying. Really, that part alone made me turn away from such cards. 

    You did a nice job of describing this aspect of credit

  17. I had a store credit card with my first pay chech after getting out of school, wish it had been 10%, the laptop i bought was $3000 after I put in all the upgrades $300 of would have been nice…
    I had no credit so cosigned with my mom… She pretty much ran the card, got the bills etc.
    I paid her my rent, bills and a few hundred for that every month, i looked at it as building some credit history since i had never done anything credit wise before that.
    2 years later i moved out, having long since paid that off, moved around a bit and then went to buy a house, surprise surprise, not only had my mother not paid off the cc, she had maxed it out, signed up for another joint card, maxed it out, and had stopped making payments on both…
    I was able to have the 2nd card removed from my credit history, however the CC company would not clear me of owing on the first one. So here 8 years after finding this out, I still have that CC sitting on my credit report dragging me down.
    Story is more of a word of warning about cosigning than store credit woes, but it is what it is…

    1. That is a horrible story James. I am sorry that happened to you. It sounds like you have learned the importance of protecting and building your credit and keeping your eyes on everything just to make sure nothing unexpected happens.

  18. “Retail stores don’t do anything to help you, they do things to make money.” – that true for everything in the private are in business to make a profit not lose money…only someone who has never started a business would think that giving bad customer service and not giving customers what they want is a recipe for success..the only agencies that don’t have market forces are government agencies..Retail Stores have competition, government agencies don’t..that is why you see the poor service at the DMV, with cops etc..they don’t have to worry about “going out of business” or the “customer” is more of an annoyance than something they need.

  19. Great Post! I love the conviction and passion. I have a few thoughts but before I start,here is my Street Cred: 40 something professional; Family of 5; Primary manager of money in the house, Our Credit Score is solid. Oh, and I hold a Sr. position in the credit card industry. Here is my advice. It is very simple. Watch ALL your accounts daily, get something like quicken to aggregate all your accounts so you can download and see every balance daily. Only carry two credit cards, An American Express and a MasterCard. Use one for your primary purchases, use the other when the first one isn’t accepted. Do not use debit cards (do the research). Do not use Store Credit.. Never allow anyone , except your employer, to automatically move money to or from any of your accounts ( research ACH). Purchase a Password Safe so you can easily store all your online payment passwords in one place. This simple system takes a while to set up, but once it is set up, it will keep you current, informed and out of trouble. Trust me.

  20. Very interesting strategy!!

    I was interested in knowing what your demographic was for people that were more likely to apply for the cards?
    i.e were they younger, older, male, female etc. or completely random?

    Also, when people said no to you, did you push the card a few more times or simply called it good and moved on to the next one?

    I just started working in retail at a store that encourages us to promote the cards, so I’ll give this strategy a shot.
    I’m lucky because our card sign up discount is 20-30% depending on the week so definitely should be easier considering you could only give a 10% discount.

    1. Great questions there Rick! I found most people that said yes were in their 30s to 50s. A good number fell into the “young parents” or “parents of young kids” demographics, while others were likely retired and didn’t mind a credit report hit for some savings on the spot.

      If they said no, I didn’t push farther. After all, I didn’t want them to have a bad customer experience at the store or feel uncomfortable. I would just call it good and move on with the checkout.

      Hope that’s helpful!

      1. Would you only ask the customer if they wanted the discount (in dollar value), or would you also include other benefits of the card?

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