One day, while you are shopping at your favorite department store, the sales clerk says to you, "If you apply for our credit card, you can save ten percent on your purchase.” You think about it and decide, "Why not?” You provide some information to the clerk and a minute or two later, your credit card application is approved, your discount is applied, and you're on your way home.

Was this a smart thing to do? There are several reasons why it may not have been a good choice:

The card will probably carry a higher interest rate than the major credit card you had planned to use. Do you really need a credit card with a 20% interest rate? The card may not include a grace period for the accrual of interest charges. You may find that although you saved 10%, you started paying 20% interest the minute you walked out the door! The quick credit check that the store made to see if you qualify for credit put a small dent in your credit score, as will any credit inquiry. In and of itself, that's not a big deal, but a number of inquiries in a short period of time can

affect your score significantly, and not for the better. The credit bureaus do not look favorably on repeated inquiries; it makes the borrower look desperate.

While it is certainly convenient to carry credit cards, it is not wise to apply for one without giving it a bit of thought first. The ten percent you save at the time you apply may be a small consolation for the large sums of money you may pay later. You might have been better off just paying with cash or another credit card in the first place.

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