There’s a common dilemma amongst shoppers. Should you take the discount and open a store card or potentially save your credit score and pay full price?

You’ve likely heard opening too many store credit cards can be bad for your credit score, but there are cases where store credit can boost your score and help you effectively pay off purchases. Here is a helpful guide to decide if opening a store credit card is right for you.

Understanding store credit

Before signing up for a store credit card, there are a few factors you should consider.

Terms 

The average interest rate for an American credit card is fifteen percent, while retail credit cards are usually twenty percent or more. Paying off items on time, factoring in a bit of interest, is typically good for your credit score.

However, be aware that the discount for certain purchases could be offset by the amount of interest you’ll pay later. Read the terms for the credit card beforehand so you don’t have to sign up on the spot without understanding the terms thoroughly.

Credit score 

Applying for any line of credit can damage your score slightly. There is a difference between a soft credit inquiry and a hard credit inquiry. For example, when you check your own credit score, that’s a soft credit inquiry, which has little to no effect on your score. Applying for a new line of credit or home mortgage is a hard credit inquiry. Since applying for a store credit card is generally a hard credit inquiry, tread carefully.

It’s difficult to calculate how much your score will temporarily be affected, but if you are in good standing, with a score of about 670 or above, you should be fine to apply for a store credit card. The small dent to your score and reduced average of credit history should last around two years. Check with a financial advisor if you are unsure about your credit standing.

You should sign up if…

You frequent the store 

If you love this store, opening a credit card might be advantageous because some offer discounts for every transaction. In addition, your credit score improves over time with good payment history. So, by making small purchases on a card frequently and paying them off, you can show credit companies and lenders that you are a responsible credit user. Frequent, small purchases on a store card are an easy way to boost your score and will pay off immensely in the future when applying for a mortgage or loan.

You can pay off your purchases quickly  

Take a serious look at your bank accounts and decide if this card will be a burden or not to your monthly bills. Calculate the interest rate with the amount of time it will take you to pay off a purchase. A financial advisor can help you with these calculations. Interest can pile up quickly, and it could be more of a hassle and expense than it’s worth for your finances.

You have little to no credit 

If you don’t have any credit, now could be a great time to start! Store credit cards often approve people with little to no credit, so you can use this card to establish your credit score and eventually open a card with a bank that will require more credit history to open a card with them.

You should not sign up if…

You’re making a one-time purchase 

If you don’t frequent this store, avoid opening a card for a one-time purchase discount. The credit inquiry for one purchase is not worth the potential downsides of the hard credit inquiry. Instead, shop around for deals on the items you have in mind.

You have a few existing store credit cards

Have you reviewed how many credit cards you have lately? While the number of cards you have doesn’t always influence your score, it can complicate your financial goals with too many payments. The average American adult has around three credit cards—two of which are store credit cards. If you have more than two or three store cards, consider canceling the one you don’t use to open one you will use more.

The card has no perks

Most store credit cards have competitive offers like no annual fee, free shipping, discounts on every purchase, and special financing. If the store has little to no benefits you can use, consider walking away from the offer. Credit cards should be a financial tool you can use to your advantage.

Talk to a financial advisor about your credit to get tailored, accurate answers suited to your financial goals.