Why you should never open a store credit card during the holidays

Store credit card promotions are common in the holiday season as shoppers pick out their Christmas gifts. 

Retailers like Macy's, Target and Lowe's and will offer up to 20 percent discounts if you apply for a store credit card on the spot. 

As the Christmas bills rack up saving $100 can seem like an enticing offer but there are factors to consider before signing on the dotted line. 

Store credit cards are likely to not be the best deal out there and can even damage your credit score, according to The Points Guy blog.

Store credit cards can lower that all-important credit score because they often have a small credit limit.

Credit scores are important because banks use them to assess creditworthiness when considering whether to give you a loan for a car, a home mortgage or a credit card. 

Credit compilers like to see individual transactions on a credit card to be below 10 percent of the card's limit. 

The lower the credit limit, the closer one in-store purchase might be to exceeding that. 

For example, if the purchase you are making is $1,000 and the card credit limit is $3,000 then the utilization ratio would be 33 percent. 

It is also advised to keep your total credit usage across all your cards at below 30 percent, according to FICO.

If store credit cards are low in comparison to those offered by banks or other major lenders, this could also be a factor in increasing that usage. 

Instead of using store credit cards, The Points Guy recommends using shopping portals  such as Rakutan, Mr Rebates and TopCashback and rewards credit cards that offer rewards and discounts. These can can often lead to greater savings. 

'Online shopping portals offer an easy way to earn tons of bonus miles, points or cash back at many popular retailers,' the site explained. 

Rakutan offers 15 percent cashback with popular retailers during Black Friday and Cyber Monday, according to the publication. 

Most airlines, hotels and banks have their own shopping portals which help to earn rewards when shopping online. 

The Points Guy also recommends using a rewards credit card such as those offered by American Express. 

'Targeted offers include deals like 20,000 bonus points if you hit a certain purchase dollar amount, 10 percent  discounts on popular retailers or $100-plus statement credits when you shop at specific merchants,' the publication explained.

Amex is the most popular card provider in the US, but it is not accepted everyway. 

In August, eBay stopped allowing customers to use American Express cards. 

The online marketplace blamed the 'unacceptably high fees' imposed by Amex for processing transactions. 

eBay is not the only company to drop AmEx over its fees to retailers, which can be as high as 4 percent. 

Retail giant Costco also walked away from the card company nearly a decade ago. Smaller restaurant chains have also stopped taking the payment processor.