Store credit cards...is this a bad idea?

Question

Hi! I start my first real job since graduating college on Tuesday! I've had many jobs before, but this is the start of a career and I need to dress appropriately because it's important to me to look professional. I own very few office-appropriate outfits (only enough for interviews) and I need to stock up on dress pants and button down shirts for work.
My question is, how bad would it be to sign up for a store credit card at Banana Republic or Express in order to pay for all the clothes that I need? I don't plan on spending so much that I won't be able to pay it off when I get my first paycheck. Do you think that opening a credit card and then immediately paying off the balance when I receive the bill would look bad for me, or help build credit? When I do pay it off, should I just hold on to the credit card or close the account?
Or should I avoid the credit cards in general? I'm sure my parents or my boyfriend would loan me some money since I really do need the work apparel.
Thanks!!

I think I need to emphasize that I am going to pay off the credit card as soon as I get the first bill in the mail. Normally I do not believe in spending money that I don't already have (which is how I got this far with just a debit card) but in this case I plan on spending money that I will have in 3-4 weeks when I receive my first paycheck. I'm not an out of control shopper, I know how to handle money, I am just asking about the impact that signing up for and then paying off the store credit cards will have on my credit rating.
Again, thanks for reading this, and for answering!

Answer 1

I would say go for it. The only problem is, store credit cards are extremely high interest. around 24%. However, as long as you pay it off, i would do it. And of course remember to buy things (for now) that can be worn with many different outfits. (like black pants, plain shirts...etc.) cause no matter what your pay check looks like, you should try and spend least amount possible until you figure out what your looking at per paycheck.

I just got my first credit card with citicard (i recommend them citicards.com). I have only charged 35 dollars of my 1000 dollar limit. so, i'm not paying it off. Always, ALWAYS make more than the minimum payment due and pay EVERY time. (this is advice that i got from a co-worker who has a credit score over 800.) As long as you do that, you'll be fine.

Store credit cards are easier to get than the ones with business', so if you haven't ever had one, you may want to start there.

And remember every time your denied your credit score goes down 6 points while everytime your excepted it goes up 1 point. And half of your credit limit open looks amazing to credit companies (so only spending 250 of 500.) (my friend works for discover).

Good luck! and be responsible, i have the urge to go buy so much stuff now that i have a credit card. be strong :)

Answer 2

Just don't mix things up or do them too quickly, I would just buy the clothes with cash and then maybe get a secured credit card once you have some money and keep the card for about a year. Always pay the balance in full when it comes. After a year get a normal credit card, something with no fees and carry on paying in full. That's about it. Save up 25 grand, then buy a repossessed one room condo with cash, now move in, leaving debt to others.. the ones who haven't read this post of mine. :) good luck.

RE:
>Store credit cards...is this a bad idea?
>Hi! I start my first real job since graduating college on Tuesday! I've had many jobs before, but this is the start of a career and I need to dress appropriately because it's important to me to look p...

Answer 3

If you are approved on the spot for the credit card, then you must have good credit.

Keep in mind that if you do this very many times, it will add "inquiries" to your account and that can hurt your credit score.

Over time, adding a new credit account or two that you pay off every month will help your credit score. Part of it is based on utilization % and if you have a lot of unused credit, banks and other lending institutions consider you a good risk. I would not recommend closing the accounts since they will help your score.

Only avoid the credit cards if you can't handle the credit and get in over your head. It is easy to do when first starting out so be very careful.

One bonus if you open the account is that many of these stores offer a discount when you buy stuff and open an account. It will save you money on your purchases and that is always a good thing.

Answer 4

If you do what you say, pay off the entire balance within a month or two, then having the credit card will NOT hurt your credit. In fact, your credit may go up. You shouldn't close the account once it's paid off, the credit bureaus take many things into account when factoring your credit score. One thing is your available credit. So, if you open a Banana Republic credit account with a credit limit of say $1000, keeping it open shows the credit bureaus that you have $1000 of credit available. Where you'll get hurt is if you have missed payments, late payments, or a balance exceeding 50% of your credit limit.

Having one or two credit cards with either no balance or a balance of less than 35-40% of the credit limit (and with your payments being on time) will actually help your credit. That being said, if you can afford to pay off your credit cards, please do so, you never know what may happen in the future (loss of job, company goes out of business, big car expense, etc.)

Answer 5

You seem to be disciplined in your approach, which is good. Building credit is no bad thing and IF you can remain as disciplined as you intend to be, it is worth doing. Presumably you will wish to own your own home at some point and building credit is good. You are also taking credit for a good reason, ie, to give you a proper start in your new career.

Do not let the balances (or credit limits) get too high. Try to pay it off every month. You may well get close to the credit limit the first month, but you should always tell yourself that your credit limit is half of what it really is.

Consider leaving your credit card at home when you go shopping. Its surprising how many times you don't buy something if you don't have the card right then!

Really, only you can decide how well you can manage credit. If you think you can, do not be afraid to take a small account.

Answer 6

Store credit cards are a fine way to establish credit. Buying some stuff, then paying off the balance does not improve your rating...buying some stuff, say 100$ worth, and then paying off 40 bucks a month , the when your balance is zero, do the same thing again. This gives you a history of making consistent payments at 3 or more times the minimum payment....after a few months of this pattern, you will get more credit card offers in the mail that you will have time to read. Credit cards are good to have, as you almost always need one to rent a car or book a hotel room, but don't think of them as money to spend when you have none. Getting into big debt is easy, so avoid it at all cost.

Answer 7

All credit cards are bad. I thought the same thing as you a decade ago and once you use a credit card it is easier to use it again.

I now shop upscale resale shops, I get great suits (from designers) for 1/4 the price. Go to the "rich" area of town and find a consignment shop.

Since you just graduated from college. Please read up on winning financially. I wish I would have had this advice when I started out. I suggest reading "The Total Money Makeover" by Dave Ramsey. www.daveramsey.com He talks about not using credit cards, how to buy a house, how to invest your money and how to get out of debt (if you are). If you are smart and stay out of debt you can retire a mult-millionaire but only if you get smart about money now.

Don't take the advice "you need to establish credit." No you don't, cash is still taken in all areas of the US and all over the world. Your debit card will cover when you "need" to use plastic or don't want to carry a lot of cash. Read the book, learn from someone older's mistakes.