Are Retailer's Credit Cards A Good Idea?
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!"
Are these retailer's credit cards the great deals that they appear to be? Let's have a closer look at exactly how these credit cards work.
It is true that these retailer's credit cards do typically offer a 0% interest rate and allow you to make purchases with no payment s for as long as the first two years; although this is usually limited to specific purchases. Let's suppose for instance that you sign up for a retailer's credit card offered by a furniture store. You might have with this card a discount of 10% on the purchase, along with having to make no down payment and no payments needed for two years.
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.
If you're not at all sure you're going to be able to pay for the purchase in full before the introductory period ends, don't do it. Now, of course, the best scenario is not to get into debt with these types of purchases at all and instead pay cash for things you really want or need. However, if you must use credit to make this type of purchase, a better bet may be to use a lower interest rate but "generic" credit card such as Visa or MasterCard, and pay down your purchases as soon as possible. Even though you won't save a percentage of the sale price as the retailer might promise you to get you to sign up for the card (such as 10% off if you purchase with the retailer's card), you'll save money in the long run because you'll be paying lower interest rates.
If the retailer's credit card in question is from a shop where you are a regular and you know that you can afford to pay the entire balance before the end of the introductory period, then these cards can be a good deal for you. If not, then you would be well advised to avoid these retailer's credit cards. Those retroactive interest charges can really hurt you otherwise. Make sure you can afford to quickly repay the balance before you sign up for anything.
Last of all; remember that no matter what kind of credit card you use, you'll pay a lot of money in interest if you aren't careful with your purchases. Think before you buy and pay off your credit card balance as quickly as possible. You should try to never carry a balance on your credit card for more than 30 days. Credit cards can be a wonderful thing, but they have to be used responsibly.
Are these retailer's credit cards the great deals that they appear to be? Let's have a closer look at exactly how these credit cards work.
It is true that these retailer's credit cards do typically offer a 0% interest rate and allow you to make purchases with no payment s for as long as the first two years; although this is usually limited to specific purchases. Let's suppose for instance that you sign up for a retailer's credit card offered by a furniture store. You might have with this card a discount of 10% on the purchase, along with having to make no down payment and no payments needed for two years.
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.
If you're not at all sure you're going to be able to pay for the purchase in full before the introductory period ends, don't do it. Now, of course, the best scenario is not to get into debt with these types of purchases at all and instead pay cash for things you really want or need. However, if you must use credit to make this type of purchase, a better bet may be to use a lower interest rate but "generic" credit card such as Visa or MasterCard, and pay down your purchases as soon as possible. Even though you won't save a percentage of the sale price as the retailer might promise you to get you to sign up for the card (such as 10% off if you purchase with the retailer's card), you'll save money in the long run because you'll be paying lower interest rates.
If the retailer's credit card in question is from a shop where you are a regular and you know that you can afford to pay the entire balance before the end of the introductory period, then these cards can be a good deal for you. If not, then you would be well advised to avoid these retailer's credit cards. Those retroactive interest charges can really hurt you otherwise. Make sure you can afford to quickly repay the balance before you sign up for anything.
Last of all; remember that no matter what kind of credit card you use, you'll pay a lot of money in interest if you aren't careful with your purchases. Think before you buy and pay off your credit card balance as quickly as possible. You should try to never carry a balance on your credit card for more than 30 days. Credit cards can be a wonderful thing, but they have to be used responsibly.
About the Author:
Steven J. Talrechi is an expert on credit and finance for over 10 years. He authors various topics on said field, including application for a credit card, and different credit card offers.
posted by Credit Counseling at
2:04 AM
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