Retail credit cards – are they a good idea?

Retail credit cards - are they a good idea? Home improvement store Lowe's recently announced a new incentive program for customers that pay with store credit cards – it will be offering a 5 percent discount on purchases, according to the Wall Street Journal.

This may seem like a good perk, but it's simply a way to get customers to spend more money. Retail credit cards are a good way to establish credit if you are new to the financial world, but it can quickly become a losing game if you let the promotional discounts sway you too often.

If you're in poor financial standing, signing up for a new credit card just to get a few bucks off your next purchase isn't the smartest idea. While it will help widen the gap between your debt and credit limit, applying for new credit too often can have negative affects on your FICO score, which can lead to difficulty securing a car loan or mortgage in the future.

Before applying for retail credit, make sure to never carry a balance, as most of them have high APRs, and that you pay it off in a timely manner. Discounts and other perks can be nice, but only as long as the credit is used responsibly.