Thanks, but no thanks.

Credit Cared GraveyardShouldn’t it appall us when someone offers us a chance to be indebted to them, as if it’s a good thing?  A couple of weekends ago my family and I went to visit the new Kohl’s store in Ames, Iowa.  There has been a lot of buzz about Kohl’s coming to town lately and so we made the effort to check out the latest thing happening in Ames.  However, as soon as I walked through those electronic sliding doors, I was shocked by how I was greeted.

As I entered the store, a very professionally dressed young woman greeted me by asking me if I had Kohl’s credit card.  I said no.  Her next question was, would I be interested in completing an application to receive Kohl’s credit card, again I said no. 

First Impressions Are Everything, Right?

You may have heard how the first impression is everything.  My first reaction to this was, “Really…the first thing I am greeted with when I walk in to the store is someone offering me a credit card?”  The lady was polite and professional and it was not like she was begging me to sign up.  But still, the fact that I could not get two steps into the store with being asked if I had a Kohl’s card really baffled me.  Since when is a friendly greeting an offer of debt?  How about a simple “hello” instead.

My fifteen year old son and I had a discussion about all of this.  We talked about how sad it is that department stores rely so heavily on revenue from their credit card sales and how a lot of people get drawn into these credit offers like insects drawn to a flame.

What’s worse is that a lot of department stores now have requirements that certain employees (usually cashiers or someone in sales) have to take “X” amount of credit applications, in a certain time frame and if not they could lose their job.

What’s in it for me?

That is the question that they attempt to market to us as consumers.  That is why the pitch to you is you get 10% off purchases using this card or if you get “X” amount of points you can redeem them for something awesome.  That is called sales and marketing.  They are trying to show you the benefits of signing up and using their credit cards.  The problem is that you really did not gain any real benefits.  Let’s take a look why not.

  1. Usually they build the discount into the price of the item (which means they did not lose any money and you really did not gain anything).
  2. It has been proven when you with plastic instead of cash, you will spend 12-18% more using plastic (and the department stores know this about you).
  3. If you are really interested in saving money you can purchase most retail items on EBAY, Craigslist, consignment stores, etc.

I am not writing this to pick on Kohl’s.  In fact, I am not sure of any department store that does not fit this description.  The bottom line is that businesses (especially department stores) are focused more than ever before to try to get you to buy their product and to use their credit cards in the process.  Remember, at the end of the day this benefits them not you the consumer.  If you are still not convinced then ask yourself this question, “What kind of friendship would we have  if I begged you to borrow money from me every time you came to my house?”

Do you believe you are saving money by getting the discounts and the points awarded to you by department store credit cards?

Justin Bennett

  1. I agree. I had that same thought. Not only are credit cards bad in general, but the retail stores have a very high rate.

  2. You know I’m still one of those weirdos who pays my card off every month. So, yes, I have a Kohl’s card because I shop there frequently and get some seriously good coupons. I have never paid them an interest charge or a late charge. I also just managed to get two free plane tickets from my Mastercard, which I once again pay off every month. I think you can get some discounts if you pay everything in full monthly. However, if you can’t be disciplined to pay it off every month (which I think describes most people), stay far away!

  3. I will never own a credit card. Do i have a debit card? Yes. But with credit cards i have seen so many people go into debt and file for bankruptcy. I have made an oathe to myself that i will never have one. And i am keeping that oathe. When i recieve applications in the mail, they get torn up and thrown away without being opened. Why is it that ALL stores must insist on their customers having their stores card?

  4. I remember Dave mentioned one time the amount Sears makes off of their credit department vs their retail sales and Sears effectively is a Credit Card company with a bunch of stuff out front. Thanks for sharing this Justin.

  5. Justin Schneider March 26, 2013 at 12:46 pm

    @Elizabeth Craw:

    Perks are great, I agree! There are definitely some great deals you can take advantage of with the “proper use” of a credit card. The whole problem is that people forget to factor in the RISK associated with credit cards! Paying your balance off every month is great, but i can guarantee there will be some month that the money designated for your credit card is going to go somewhere else. To things like small car repairs, unexpected family event, a forgotten birthday, etc. Then you are stuck wioth a balance and have to wait until the next pay period to pay it off. By then the chances are you have paid a little interest as well, therefore more than likely nullifying and “savings” you obtained by using the credit card. The point is that when you use money that is not yours, even with the intention of paying it back in a timely manner, you’re gambling on the hope that you will be able to pay it back. Sometimes the chance of losing is very slim, but there is still a chance.
    I use PerkStreet Financial for all the great perks it comes with. It’s a debit card and has some awesome savings tied to it.

  6. Great commentary Justin! Thanks for your crusading efforts, and for helping so many people!

  7. Credit cards, credit cards, credit cards!!! All a person needs is a debit/cc associated with your checking account. My husband left me and a business we owned together. Once that word got out, sales sank and I had to pay business expenses with credit cards. In the divorce, I had to pick my battles, so chose to pay $65,000 of business credit card debt in exchange for lifetime alimony. Until we settled, I had to use temporary alimony to pay monthly credit card bills, and then turn around and use them for groceries! I needed my good credit rating. Of course, those accounts are now paid and closed. Don’t sign up for them, don’t transfer balances. One word: DON’T!

  8. Elizabeth Craw March 27, 2013 at 8:02 am

    @Justin Schneider, for the most part I agree with you, what we do doesn’t work for most people. We’ve been paying off our two cards (Mastercard and Kohl’s) in full each month for a good five or six years now, and that time period includes two interstate moves. We do also budget, and when we put a purchase on our credit card, the money comes out of our budget the day we charge it; we don’t wait until the day we pay off the card. We don’t spend it if we can’t back it up with cash! We still keep a cash emergency fund. I’m not arguing that everybody should try our method, I’m just saying that credit cards can work for some people.

  9. @Justin Schneider

    I agree never use a credit card without the money to pay it. I have used credit cards for over 15 years and never carried a balance. The key is to already have the money before you spend. So have a 6 month emergency fund and savings on top of that. Use the savings over the emergency fund for the credit card payments. That way if an emergency (true emergency) comes up, then use the emergency fund and not the money set aside for the credit card. It is no different than paying cash, you only use what you have, no more. Also only spend money on the things you have to have (needs compared to wants). I use the credit card for gas, groceries and the similar need items. I use the rewards from the credit cards for gift cards that I use for the wants. So buying gas with credit cards, gives me gift cards at the GAP for clothes for my kids. I also only buy sale items at GAP to make the gift cards go even farther. I would say that in the past 15 years I have received over $10,000 in gift cards (averaging around $700 a year in free rewards gift cards). I totally understand people not wanting to use credit cards if they are not good savers. However if you can save money and not spend it on wants, then credit cards are a great way to get the wants without spending your own money.

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