Here's What Happened When I Accidentally Signed Up for a Store Credit Card

It's not always a bad idea to sign up for a store credit card. If you shop at a particular retailer often and the credit card offers significant savings or rewards you can take advantage of, then it can be a good fit for you. But often, store credit cards are fairly limited in how you can use them and spend your rewards. A more general credit card that offers rewards on a wider swath of your regular spending is a better bet. 

Unfortunately, it can be all too easy to be swayed into signing up for one of these cards in store. Here's how that happened to me.

An in-store misunderstanding

When I was in my early 20s, I received a gift certificate to a department store I rarely shopped at, but I was happy for the little shopping spree. When I went to the cashier to check out, they asked me if I wanted to sign up for the store card. I don't remember the exact wording they used, but I'm gonna go ahead and say they did not make it very clear upfront that it was a credit card and not a store loyalty card. But it did come with a nice discount on that day's purchase for signing up.

Even though I'd never shopped in that store before and didn't plan to again anytime soon, I was all about saving money, so I said sure. Who was I to turn down a free discount? Then out came the paperwork, which seemed a little excessive to me. And then there was a mention of a credit check. You'd think that would have tipped me off, but I was so deep in the process at that point, I just kept going. At that point in my life, I only had one credit card, which had been upgraded from a student credit card just the year before. I didn't know much of anything about what that credit check meant.

A waste of wallet space

I walked out of the store that day with a pretty new shirt and an unnecessary new credit card. I wasn't in the habit of checking my credit score back then, but I can assume I took a small ding thanks to the credit check that ran when I opened the card. For most people, the hit will be fewer than five points, so it probably wasn't a big disruption. But now I was carrying around a credit card that I would literally never use again.

The card also became part of my credit history, and the longer I carried it around, the bigger of an impact it would have. The age of your credit history makes up 15% of your FICO® Score; the older an account is, the better it reflects on you as a credit user. 

It was also contributing to my credit utilization ratio, which makes up 30% of your FICO® Score and is the total amount of credit available to you compared to the amount you use. Since I only had one other card open at the time, this store card was making up a significant amount of my available credit. Closing it would have a negative effect on both those factors of my credit score.

When I finally got around to closing the card several years later, I'd had it long enough that I likely took a hit to my credit score when I closed it. (Again, I wish I could say by how much, but I still wasn't looking up my score at that time.)

Consider your spending when opening a new credit card

Credit cards can offer a ton of benefits if you use them wisely. But one of the main factors to consider when applying for a card is whether you'll actually use those benefits (not to mention the card!). If you can find a simple cash back credit card that rewards you on a lot of your spending, that's likely a better bet than a store credit card that you can only use with one vendor. 

By the way, I still have the shirt I bought that day, so at least it wasn't a totally wasted experience.