Department Store Credit Cards - What You Need To
Know
Department store credit cards are among the easiest credit cards
to get, and also the most expensive to use. The standard rate on a
department store credit card can be as high as 24.99% and go even
higher if you make a late payment or go over your limit on the card.
The reason departments stores make it easy to get credit cards is
because they know people are more likely to justify spending money
there if they can charge it. It doesn’t feel as much like money
that way, and then, once you’ve used the card, the department store
also makes money on interest if you don’t pay the balance off in
full when you receive the bill.
Another way a department store credit card can lure you into
making bad financial decisions is by persuading you to shop at a
department store, because you have the card, when in fact you can
get the same or better merchandise at a much lower price elsewhere.
If you buy something this way, then carry a balance and let
interest accrue on your purchase, you are stung twice. Chances are
good that if you fall into the habit of doing this you will not even
notice you are overpaying for the things you buy, since your focus
will shift almost entirely to the department store and what it can
offer.
For a good article critical of department store credit cards, go
to:
http://www.consumertipsreports.org/the_treachery_of_department_store_credit_cards.html
On the other hand, if you have just emerged from a messy divorce
or other life disaster and are in need of credit repair, department
store credit cards can be a good way to go if you have the
discipline to pay them on time and pay them off. The idea behind
credit repair with these cards is to establish a good payment
history through the department store credit card, then apply for a
major credit card with a better rate and close the department store
card down for good as soon as you get it.
Obviously, if you keep the department store credit card and keep
the major card too, running up balances on both and accruing
interest on both, you will destroy yourself with your own strategy.
This is a remarkably easy thing to do, and department stores count
on you doing it.
If you want to apply for a department store credit card, at least
shop around and check interest rates and terms. Are discounts
offered? Does the store offer a wide variety of merchandise at
decent prices, or is it somewhere you would normally never shop if
you didn’t happen to have the card?
If you are considering a department store credit card because
those cards are easier to get, but you don’t really shop at
department stores, you might also consider applying for a
gas station credit card instead.
Often gas station cards are also easier to get and they can
frequently be used for other merchandise such as hotels, repairs,
restaurants, and travel supplies. Often they offer special discounts
and deals on gas, rental cars, and vacation planning, and some have
great perks that can be traded in for merchandise or other kinds of
discounts.
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