In 1958, a department store chain based in small suburb of Dallas, Texas issued a credit card that afforded users a great discount on products bought from their stores using the card. Ever since J.C. Penney started that trend, many other department store chains have followed suit, realizing the potential profits of this.
With discounts of up to 15%, store credit cards can be hard to resist. This can especially be true during holiday seasons such as Christmas when discounts can mean a whole lot of savings due to high volume of purchases. However, as with most credit cards, you’ve got to read the fine print and weigh the pros and cons before you jump on the bandwagon and get a store credit card for yourself.
Cons of getting store credit cards
The greatest drawback of store credit cards would be their exorbitant APRs. These can reach as high as the upper teens. For some people, that simply isn’t worth it. If you tend to miss paying off your card balances each month, then you should forget about store credit cards.
Another disadvantage would be the effect of the open lines of credit on your credit score. With all the alluring discounts, it’s easy to get carried away with your spending and end up with a pile of debt.
Pros of getting store credit cards
Unlike regular credit cards, store credit cards are much easier to sign up for. This can make store credit cards useful in establishing a good credit history. The lower spending limits also mean that you are far less likely to get carried away with your spending.
With department store cards, you can sometimes obtain a financing option for larger purchases such as appliances, furniture or electronics. Some stores offer their customers the option to pay for such purchases through a 6-12 month installment plan with little or no interest. However, the catch here is default payments may result in a longer repayment period where interest charges become applicable after this period.
Just like their regular counterparts, store issued credit cards come with all sorts of reward programs that you can take advantage of. In addition to these, most stores have a ‘special savings’ event whereby greater discounts are offered during certain periods exclusively for cardholders.
While making purchases at your favourite retailer, you may pay attention to store credit card offers. Really, 10% of discount may seem a great advantage. Take your time and think twice before applying for this store credit card. You will get rewards and discounts as well as high rates and large fees. Nowadays, large department stores and shops try to encourage customers to spend more. They offer special to their regular customers. Such offers help to save a considerable sum, but they usually come with too high interest rates. Let's sort out how profitable store credit cards are. No doubt, shopping is an integral part of our life. We buy lots of things every day. Have you ever thought of signing up for a store credit card to get that 10% discount? The aim of retailers and department stores is quite clear. They wish to get more customers soever. Really, having a Bloomingdale's card, you will be inspired to shop there rather than in a store where you have no discounts. Making store credit card appliation, keep in mind that all rewards and discounts do not come from nowhere. They are not gifts. Anyway, store credit cards are not the same. For instance, a Gap credit card offers a 10% rewards certificate. The interest rate on the card is 21%. Default rates are higher.How do you think, can those rewards cover these huge rates? Besides, there is another problem with this type of plastic. It is their reward scheme. Some retailers allow you to start earning points after your first credit card purchase. But many store credit cards require you to spend much to qualify for credit card rewards. And still, do you wish to charge $1,000 to get that $25? Is it that profit you dreamt of? Finance experts give advice on this matter. If you want to buy a big-ticket item with that large discount, apply for this store credit card, and pay off the balance at once to avoid paying interests. Then you may cut your card into two halves. Perhaps, you will find it strange to hear, however, it can help you to avoid further problems with this card. Eventually, if you are looking for a perfect deal, you'd better choose a regular credit card with and zero percent introductory rates. Thereby, you are free to charge your purchases and pay no interest, at least for a that introductory period.
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