Retailer's Credit Cards: What Are They, And Should You Have Them?
Everywhere you go, we see ads screaming at us to take on this credit card or that credit card. The ads scream at us, "0% down, no interest for three years!"
However, are these retailers' credit cards really the deal they seem to be? Let's take a look at what happens when you take on a credit card from a retailer.
While these credit cards really do let you buy with no money down, offer a 0% interest rate and let you avoid making payments for the first couple of years. This offer is usually limited to a specific purchase, however. Lets' say that you apply for one of these retailers' credit cards at a furniture store. They may offer a discount of 15% off of the purchase price for signing up, offer no payments for two years and a 0% interest rate for this introductory period.
This is a great deal, with one caveat. If you don't completely pay off this retailer's credit card within those two years, you'll be charged interest on the purchase ? not just from the day that this no payments period runs out, but retroactively. The interest will probably also be compounded every thirty days over that two years; this can really add up.
You should approach these deals with caution. You need to make absolutely sure that you can pay the balance on these retailer's credit cards in full before the introductory period ends. Otherwise, you could end up paying a fortune in interest and other charges. This can make these purchases far more expensive than the original price! Retailer's credit cards typically bear interest rates which are far higher than are those associated with traditional credit cards.
Unless you are absolutely sure you can pay in full before the end of the introductory period, don't sign up for these retailer's credit cards in the first place. It is better by far not to get into debt in the first place and to pay cash for these purchases. If it simply is not possible for you to pay for these purchases in full upfront, use a traditional credit card instead and pay off the balance as quickly as you can. You may not get a deal on the purchase price of the item, but you'll save yourself a lot of money in interest payments over the long run.
Now, if you shop at a store regularly and you can easily pay off your balance in full in a timely manner, then these retailer's credit cards can indeed be a good thing. If you are just signing up for these retailer's credit cards in order to receive a discount on a specific purchase, then you may be better off without it. Those retroactive interest charges can come back to haunt you otherwise, so make sure you can afford to repay the balance in full before the end of the introductory period before you sign up for these cards.
Finally, remember that no matter which credit card you use, you're going to end up paying a lot in interest charges if you don't use responsibly. So shop carefully, and pay down your credit card balances as soon as you can; in fact, it's a good rule of thumb to have that you never carry balances on credit cards for more than 30 days. Credit used responsibly can be a good thing, but you have to be careful just two you get it from.
However, are these retailers' credit cards really the deal they seem to be? Let's take a look at what happens when you take on a credit card from a retailer.
While these credit cards really do let you buy with no money down, offer a 0% interest rate and let you avoid making payments for the first couple of years. This offer is usually limited to a specific purchase, however. Lets' say that you apply for one of these retailers' credit cards at a furniture store. They may offer a discount of 15% off of the purchase price for signing up, offer no payments for two years and a 0% interest rate for this introductory period.
This is a great deal, with one caveat. If you don't completely pay off this retailer's credit card within those two years, you'll be charged interest on the purchase ? not just from the day that this no payments period runs out, but retroactively. The interest will probably also be compounded every thirty days over that two years; this can really add up.
You should approach these deals with caution. You need to make absolutely sure that you can pay the balance on these retailer's credit cards in full before the introductory period ends. Otherwise, you could end up paying a fortune in interest and other charges. This can make these purchases far more expensive than the original price! Retailer's credit cards typically bear interest rates which are far higher than are those associated with traditional credit cards.
Unless you are absolutely sure you can pay in full before the end of the introductory period, don't sign up for these retailer's credit cards in the first place. It is better by far not to get into debt in the first place and to pay cash for these purchases. If it simply is not possible for you to pay for these purchases in full upfront, use a traditional credit card instead and pay off the balance as quickly as you can. You may not get a deal on the purchase price of the item, but you'll save yourself a lot of money in interest payments over the long run.
Now, if you shop at a store regularly and you can easily pay off your balance in full in a timely manner, then these retailer's credit cards can indeed be a good thing. If you are just signing up for these retailer's credit cards in order to receive a discount on a specific purchase, then you may be better off without it. Those retroactive interest charges can come back to haunt you otherwise, so make sure you can afford to repay the balance in full before the end of the introductory period before you sign up for these cards.
Finally, remember that no matter which credit card you use, you're going to end up paying a lot in interest charges if you don't use responsibly. So shop carefully, and pay down your credit card balances as soon as you can; in fact, it's a good rule of thumb to have that you never carry balances on credit cards for more than 30 days. Credit used responsibly can be a good thing, but you have to be careful just two you get it from.
About the Author:
Steven J. Talrechi is a veteran on credit and finance for more than 10 years. He writes about various topics on said field, including application for a credit card, and different credit card offers.
posted by Credit Counseling at
2:29 PM
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