Store-Branded Credit Cards: A Shocking Look Back
In an effort to better organize my financial documents, I’ve been going through a box of old bills. I was somewhat surprised to see just how many of those bills were from store-branded credit cards. I found old bills from Belk, JC Penney, and Sears. The bills were dated January 2003 – December 2004. As I was flipping through the bills, I noticed the following::
- I made purchases at one or more of these stores, every month, for the two year period starting January 2003 and ending December 2004. That’s right. I shopped at Belk and/or JC Penney and/or Sears consistently for two years. I was a loyal and dedicated customer. I returned, again and again, like a horse to a trough.
- I never once, despite repeated promises to the contrary, paid a balance “in full”. I paid interest on every purchase. I did manage to pay (at times) more than minimums, but I never took a balance all the way to “zero”.
- The lowest interest rate for any of these cards appears to have been about 19.99%.
Wow. Those bills represent only a small portion of the store-branded credit card bills I’ve received over the course of my adult life. I hate to think about the amount interest I’ve paid over the last decade and a half. But, more important than the amount of interest paid, is the fact that I continued to shop at the same stores, over and over, despite the fact that I already owed them more than I could afford pay back. Why? Why in the world did I continue to shop at these stores?
Now, let’s take a quick look back over the two year period from April 2005 until April 2007. Remember, it was in April of 2005 that I decided to stop using credit cards and to get out of debt. So, I put all of my store-branded credit cards in a drawer and “forgot about them”. In March of 2007, I had transferred the balances from all of my store-branded credit cards to a single Visa card. I had a “clean slate”. I was no longer receiving monthly bills from the above mentioned companies and I was working hard to pay off the Visa card. Let’s take a look at my “new relationship” with these same companies:
- During the two year period from April 2005 until April 2007, I made one purchase from Sears, four purchases from JC Penney, and six purchases from Belk. I used cash.
- I never received a bill, so I never had to worry about paying interest, and I never had to worry about “minimums”.
- I never paid interest on a single purchase, because I paid cash.
After making the decision to no longer use credit cards, not only did my interest payments go to “zero” but my spending went down. Dramatically. I broke a cycle. I am no longer “store loyal” or “brand loyal”. I do not feel “privileged” to have a store-branded credit card.
Now, before someone leaves a comment suggesting that I was irresponsible, let me be the first to agree! I was also foolish, ignorant, and naive. I believed that I would “one day” make enough money so that I could pay off all of my debts. I believed that I “knew what I was doing”. I made promise after promise. But, nothing ever happened until I put the store-branded credit cards away and forced those stores to EARN my business. If you want me to shop at your store, you better offer low prices, good customer service, an easy-to-understand return policy, and friendly cashiers. I’m no longer impressed by the name on your door. It’s no big deal to me where my clothes come from or how much they cost. Plus, I’m not longer enticed by “save 10% when you use your store-branded credit card” deals. Why? Because, I know that I am saving MUCH more than 10% because I take the time to compare prices and I go to the store with the best deal, not the store with the easiest financing options!
Recognizing that some of you will think I’m crazy, I challenge you to do the following. Put your credit cards, all of them, in the back of your dresser drawer, and live without them for three months. Then, examine your spending habits. I’m not much on “guarantees”, but I’d (almost) guarantee you that you’ll spend less money, you’ll be less “brand-loyal”, and you’ll find newer, less expensive places to shop. I dare you!
(If this post suffers from grammatical inconsistencies, I apologize. As I type this, my son and daughter are running laps around me, playing freeze-tag. I am, to say the least, a little distracted!)