Saving Big—and Protecting Your Identity—with In-Store Credit Cards

The temptation is always there. You’ve waited in line in a major retail store, your arms laden with items, and finally it’s your turn at the register. The salesperson rings you up, announces your total, and asks, “Would you like to save 20% on today’s purchase by signing up for our credit card?”

Of course, the goal is to get you become a cardholder, as you’ll receive coupons and offers and will be more likely to shop in that store once you have a credit card. The flip side, however, is that you now own another credit card that will appear on your credit report. That inquiry into your credit can impact your score whether you are approved for the card or not, and these store cards often carry much higher interest rates than a general use credit card.

But there’s something far more important to keep in mind about signing up for that or any other card: where is your information going to end up? It might be tempting to sign up for that card on the spur of the moment—especially if you’re Black Friday shopping, although the customers in line behind you might not thank you for doing so—but during the busy holidays the potential for your paper application to be laid aside and then lost or stolen might be higher than usual.

You might be one of the more cautious shoppers who never signs up for in-store or “closed loop” credit cards, but that doesn’t mean you don’t need to watch your credit report for signs of these cards appearing. If there are inquiries from these companies or even the appearance of these cards on your report, that could be a sign that someone is using your identifying information to open new accounts.

New account fraud is a growing form of identity theft, for a variety of reasons. Thanks to the new EMV or “chip” credit cards, it’s harder than ever to steal the information off of your card through the POS reader in the store, and difficult to create a duplicate of your card. Also, with better alerting and monitoring systems, a thief is more likely to get away with using your information fraudulently on a new card that he opened in your name than he is by stealing your existing card information. Finally, the less stringent credit requirements on in-store credit cards could make it easier for a thief to pass off your information as for his own when applying for a card. By watching for these accounts in your credit report, you’ll be more likely to catch fraudulent activity early and be prepared to take action.

It's important to note that there are some really great deals from some stores in exchange for getting a loyalty credit card, but it’s a good idea to apply for the card ahead of time. You can contact the company directly and request the one-time percentage discount to be used for your holiday shopping instead of waiting for the offer at the register.

Questions about identity theft? Connect with the ITRC through our toll-free call center at (888) 400-5530, live chat feature or on-the-go through our IDTheftHelp app for iOS and Android.

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