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Do You Want To Put That On Your Kohls Charge?

April 12th, 2007 · 1 Comment

As I have mentioned before, it is not entirely far-fetched for a company to make more profits from its credit card business than the actual products they sell. In my article Secrets of the Big Box Stores I mention how during the 1980s Sears had a Discover Card division that became so profitable it was making more profit than the whole store! Sears was essentially a credit-card company with some Craftsman tools and clothing out front. Now how does all of this relate to the title of this article?

Let me just rattle off the stores in my area who have employees brainwashed to ask you at checkout to put your purchase on their 22% interest , God-forsaken, egotistically-driven, logo-emblazoned credit card. Well, they don’t use all those adjectives but I need to make this interesting. They are Sears, J.C. Penney’s, Kohls, Dicks Sporting Goods, Macy’s, The Gap, Old Navy and Ann Taylor. I’m not sure how the scheme operates but perhaps the employee gets a small commission for each sale put on a charge card or certainly a bonus for each new charge card opened. Any way you slice it, the odds are high that you well get hosed by putting your purchase on their card. Why is this?

  • If you were going to pay cash at the checkout, they just talked you out of paying off that debt immediately. Well, duh! Now you have another bill on another separate credit card to remember to pay next month. Again, the score is now Kohls 1, you 0.
  • I’ve said it before and here it is again. On average, a typical consumer spends 12% to 18% more when using plastic (debit cards included). Exactly the same philosophy as poker chips in Las Vegas. If you don’t see your hard-earned green bills in front of you, you’re more likely to spend it.
  • You also just added yourself to their mailing and possibly phone list. DoNotCall.gov will remove you from their telemarketer list, but unfortunately there is no IAmHemorrhagingMoneyAt22Percent.gov to extinguish their confiscatory interest rates.
  • Having all of those store department credit cards will eventually affect your credit rating. When my wife and I applied for our first mortgage in 1997 the loan officer asked “Why have you opened and canceled 12 credit cards in the past year?” and we truthfully admitted to doing it for the initial 20% discount when you open a new account at many merchants.

So before you put that Kohl’s or any other purchase on their store-branded card, think twice at how disciplined you will be at paying it off on-time, interest-free.

Tags: Best of Matt Hutter · Credit Cards · Money

1 response so far ↓

  • 1 Nichole // Jul 18, 2013 at 12:29 pm

    You’re close, but there a few facts that you are missing from this article. Having worked at several of the department stores mentioned(still working one) I am qualified to correct you. The first is that we are not brainwashed. We know what we’re doing- earning a living. There is not incentive to the associate for a purchase being put on a kohl’s charge. The only tiny incentive is a dollar or two for every application you send through. The entire department store has a credit goal. Everyone from the store manager down is dependent on that goal being met to be allotted funds and salary hours for the store. The 22% interest rate you speak of is called an APR. If you have a charge for $100 dollars at the end of the month you don’t get an extra $22 stacked on your bill. Everywhere I’ve worked we encourage customers to open an account to receive all of the extra discounts and perks followed by paying the charge off at the register immediately following. To avoid a monthly bill and gaining interest while still getting great deals. So the answer to whether having a department store charge is right for you isn’t that easy to pone down. If you’re going to shop at Kohl’s a lot then it would be wise to have a credit card for the extra discounts not available to non-card holders every month. If you–knowing yourself better than anyone–know you can not handle the credit then don’t get it. It has advantages for some. Use credit cards responsibly. P.S. Everyone knows if you open a credit account and close it over and over it will raise a red flag to loan officers. That was a new kind of stupid credit card move.

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