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Store Credit Cards

Monday, February 04, 2008

While shopping for a wardrobe at your favorite retailer, something may catch your eye, i.e. a store credit card offer. Some 10% of discount may seem a good bargain. Take your time and do some math before signing up for this store credit card. Behind the discount and rewards, you've got hefty rates and large fees.

Nowadays, specialty shops and large department stores try to encourage their customers to spend more. In what way? They make special credit cards offers to their frequent customers. The chance to save a considerable sum sounds not so bad. But what do you say to high interest rates? Let's find out whether it makes sense to apply for a store credit card.

Let us be honest, shopping is an integral part of our life. Like it or not, we have to buy lots of things to maintain the life. Oftentimes, while doing another shopping spree, you stop at the register with a shopping trolley full of various items and think for a moment, maybe it's high time to apply for a store credit card and get that 10% discount?

The aim of department stores and retailers is quite clear, i.e. to boost sales, and get more loyal customers. Really, if you have a Bloomingdale's credit card, most obviously you'll be inspired to buy something there rather than in a department store where you have no discounts and credit card perks.

This is what retailers expect you to do. Making store credit card deals, bear in mind that all those discounts and rewards do not come from nowhere. They are not free, that's the point you should keep in mind.

Anyway, we must acknowledge the fact that store credit cards are not the same. Take for example, a Gap credit card that enables to earn a 10% rewards certificate. The interest rate on this card is 21%. Default rates are even higher. Probably, it's not so exorbitant, but let's face it, it's far from ideal. Put the pencil to it, and do some math. Most obviously, the result will be rather frustrating.

Another problem with this type of credit cards is their reward schemes. With some store credit cards, you start earning points right after the first credit card purchase. Meantime, the other retailers require you to spend large sums to qualify for credit card rewards. And still, are you so willing to charge almost $1,000 to get that $25? Is it worthwhile?

Finance experts give sound advice on this matter. If you are eager to buy some big-ticket item with that gorgeous discount, you may apply for this store card, and repay the balance at once in order to avoid paying interests. After that you may cut this card into two halves. Though you may find it wild to hear, it prevents you from further problems with this card.

After all, if you are looking for a great deal, you'd better apply for a regular credit card with zero percent introductory rates. This way, you are free to charge every purchase and pay no interest, at least for a stipulated period of time.