Are Retailer's Credit Cards A Good Idea?

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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% 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. 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 sounds like a great deal; however, if you can't pay off the balance on this retailer's credit card in this introductory period, then you'll be charged interest on this purchase. In fact, this interest is often retroactive and may even be compounded monthly ? this means you could end up paying far more than the purchase price for this item.

So, you have to be careful here. If you want to use one of these retailers' credit cards, you have to be willing to be very, very conscientious and pay off the balance on that credit card before your introductory "special" period ends. If you don't, you're going to be paying a lot more for that purchase than you intended to -- and here's the thing; a lot of times, retailers' credit card interest rates are HIGHER than those of your traditional Visa or MasterCard. Therefore, you're also going to be hit with a higher interest rate for those purchases. 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.

In conclusion, then, a retailer's credit card can be a good thing to have if it's a store you shop at a lot and you regularly pay down your balance completely. However, if you don't shop at the store a lot and are only signing on for a retailer's credit card as part of a "special" deal in hopes you'll save money in the long run, be careful. Retroactive interest charges will come back to bite you if you don't pay down the balance by the end of the promotional period, and you'll be left paying a lot more than you would have if you had paid cash or even used a different credit card.

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.

Article Source: Credit Card Bad Credit People

About the Author

Steven J. Talrechi is a veteran on credit for 12 years. He writes about various topics on said field, including application for a credit card, and different credit card offers.

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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% 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. 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 sounds like a great deal; however, if you can't pay off the balance on this retailer's credit card in this introductory period, then you'll be charged interest on this purchase. In fact, this interest is often retroactive and may even be compounded monthly ? this means you could end up paying far more than the purchase price for this item. 
So, you have to be careful here. If you want to use one of these retailers' credit cards, you have to be willing to be very, very conscientious and pay off the balance on that credit card before your introductory "special" period ends. If you don't, you're going to be paying a lot more for that purchase than you intended to -- and here's the thing; a lot of times, retailers' credit card interest rates are HIGHER than those of your traditional Visa or MasterCard. Therefore, you're also going to be hit with a higher interest rate for those purchases. 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. 
In conclusion, then, a retailer's credit card can be a good thing to have if it's a store you shop at a lot and you regularly pay down your balance completely. However, if you don't shop at the store a lot and are only signing on for a retailer's credit card as part of a "special" deal in hopes you'll save money in the long run, be careful. Retroactive interest charges will come back to bite you if you don't pay down the balance by the end of the promotional period, and you'll be left paying a lot more than you would have if you had paid cash or even used a different credit card. 
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. Article Source: <a href="http://www.allbestarticles.com" target="_blank">Credit Card Bad Credit People</a> About the Author: Steven J. Talrechi is a veteran on credit for 12 years. He writes about various topics on said field, including application for a <a href="http://www.apexcreditcards.com/">credit card</a>, and different <a href="http://www.apexcreditcards.com/">credit card offers</a>.