You can watch the video below or read below. I am going to share the challenge of opening store credit cards so you can understand their marketing and build credit the right way!

A few of my clients have told me they are building credit with store credit cards because they get offered deals, reward or points. However, they carry a balance.

As a consumer you are always going to be marketed to by credit card companies.

Can you build credit?

Yes, you certainly can. As long as the store credit card is reporting to one of the major credit reporting companies. You can get your free credit report at AnnualCreditReport.com

What are the challenges?

First, they get you into the store by offering cardholders vip sales or deals.

I will say, this is fantastic if you can pay the balance off in full when the credit card statement comes.

They want you to buy as many products from them as possible! As you scroll through their website or magazine you are creating endless wants for yourself! This is the most difficult way to shop. By creating wants that you can’t afford sets you up for failure.

The best way to shop is to have a specific item in mind and shop local. I love supporting our local stores. If you can’t find the item in your community, shop around for the best price and make your purchase.

Store Card Marketing

Stores ultimately want you to carry a balance on their credit card – this makes them a lot of money in interest!

Let me explain! You buy products from them. This is the first way they make money. Then if you are are unable to afford the products, they give you the opportunity to charge it to your store credit card.

If you don’t have good credit, they are going to charge you a higher interest rate. As a result, your interest rate will probably be quite high, maybe 21% or 22%.

In the event you are unable to pay the balance in full, it’s no problem! They inform you to make the minimum payment. This seems really attractive to the person living from one paycheck to the next. However, it can get out of control quickly.

When you are unable to pay the balance in full, you are paying them a lot of money in interest. This is the second way they earn income! In return, you are paying more for the items that you purchased because of the additional interest.

How does this help you?

It’ doesn’t! It only makes you shop in their store or online, browsing through all the stuff you want but can’t afford. So you put it on credit.

Did you know carrying a balance of more than 30% of the limit on your credit card hurts your credit score?

Want to know how credit cards work? Check out “How a credit card works for beginners”.

The BEST way to build credit

When building credit, one of the ways is to open a credit card with the bank that holds your checking or savings account.

When you get the credit card, make only one small purchase per month. For example, buy a gallon of milk or something similar to $10.00. The perfect amount is the amount you can pay in full each month.

Good Financial Habits

• Pay your credit card balance in full each month.
• Make sure you make your payments on time.
• Keep your credit card balance to higher than 30% of the limit. If it goes over 30%, this will hurt your credit score.
• Avoid maxing out credit cards
• Don’t fall into the marketing trap of buy now, pay later.
• If you don’t have the money now, you probably won’t have it later

Still want more information? Check out The Best and Easiest way to Establish Credit – It’s a how to guide!

***Keep in mind if you have a credit card and you never use it, you are also not building credit.

It really is about having the willpower to say no to things you really want and avoid putting them on credit to pay later.

Our opinions based on our values

We are all going to have our own opinions based on our values!

I have been learning about how to better serve my clients based on their values and what’s most important to them using Bankcode.

The “A” or Action personalities love credit! While the “B” or Blueprint personalities dislike debt!

If you and a significant other are opposites, I highly recommend checking out “Bankcode” because opposites that attract also attack”. She has a fantastic program on relationships that includes parenting kids in their different codes. This has helped me tremendously help me understand my son!

Learn more about your values at https://my.bankcode.com/renee.hugger