Article Surfing Archive

One day, while you are shopping at your favorite department store, the sales clerk says to you, *If you apply for our credit card, you can save ten percent on your purchase.* You think about it and decide, *Why not?* You provide some information to the clerk and a minute or two later, your credit card application is approved, your discount is applied, and you*re on your way home.

Was this a smart thing to do? There are several reasons why it may not have been a good choice:

# The card will probably carry a higher interest rate than the major credit card you had planned to use. Do you really need a credit card with a 20% interest rate?

# The card may not include a grace period for the accrual of interest charges. You may find that although you saved 10%, you started paying 20% interest the minute you walked out the door!

# The quick credit check that the store made to see if you qualify for credit put a small dent in your credit score, as will any credit inquiry. In and of itself, that's not a big deal, but a number of inquiries in a short period of time can affect your score significantly, and not for the better. The credit bureaus do not look favorably on repeated inquiries; it makes the borrower look desperate.

While it is certainly convenient to carry credit cards, it is not wise to apply for one without giving it a bit of thought first. The ten percent you save at the time you apply may be a small consolation for the large sums of money you may pay later. You might have been better off just paying with cash or another credit card in the first place.