The ads are nearly inescapable. They beckon to us from everywhere; telling us that we can buy with no money down ad accruing no interest for as long as 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.
While these credit cards really do let you buy with no money down, offer a 0% interest rate and let you avoid making payments for the first couple of years. This offer is usually limited to a specific purchase, however. Lets' say that you apply for one of these retailers' credit cards at a furniture store. They may offer a discount of 15% off of the purchase price for signing up, offer no payments for two years and a 0% interest rate for this introductory period.
That's great, if you can swing it. However, there's a caveat. If you don't pay off that credit card balance IN FULL within the time the store gives you to pay off the balance (let's say, two years), you might think that you're going to be charged interest beginning the first day after the end of that introductory period, but that's usually not true. In fact, you're also likely going to be charged interest retroactively to the day of the purchase, and it may also very well be compounded during those months, usually every 30 days or every billing cycle.
These cards should be approached with caution. If you cannot pay off the balance in full before the end of the introductory period, then you are probably better off without this card. Those retroactive interest charges could add up to quite a lot of money. Remember that these retailer's credit cards often have much higher interest rates than a regular MasterCard of Visa would.
If you're not sure that you can pay the entire balance within the introductory period, don't apply for the retailer's credit card. You are much better off not incurring this kind of debt; if possible, pay cash for these large purchases. If you cannot do so, then use a regular credit card instead ? the lower interest rates will end up saving you a lot of money over time. While you may lose out on the discount offered on the purchase price, you'll still be saving money by avoiding these retroactive interest charges.
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.
Keep in mind that no matter what kind of credit card you use to make a purchase, you should always make sure to pay off your balance as quickly as possible. In fact, it's best not to carry a balance on your credit card for more than 30 days ? this will prevent your having to pay interest. Credit cards can be a big help, but you need to use them very responsibly. - 15224
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.
While these credit cards really do let you buy with no money down, offer a 0% interest rate and let you avoid making payments for the first couple of years. This offer is usually limited to a specific purchase, however. Lets' say that you apply for one of these retailers' credit cards at a furniture store. They may offer a discount of 15% off of the purchase price for signing up, offer no payments for two years and a 0% interest rate for this introductory period.
That's great, if you can swing it. However, there's a caveat. If you don't pay off that credit card balance IN FULL within the time the store gives you to pay off the balance (let's say, two years), you might think that you're going to be charged interest beginning the first day after the end of that introductory period, but that's usually not true. In fact, you're also likely going to be charged interest retroactively to the day of the purchase, and it may also very well be compounded during those months, usually every 30 days or every billing cycle.
These cards should be approached with caution. If you cannot pay off the balance in full before the end of the introductory period, then you are probably better off without this card. Those retroactive interest charges could add up to quite a lot of money. Remember that these retailer's credit cards often have much higher interest rates than a regular MasterCard of Visa would.
If you're not sure that you can pay the entire balance within the introductory period, don't apply for the retailer's credit card. You are much better off not incurring this kind of debt; if possible, pay cash for these large purchases. If you cannot do so, then use a regular credit card instead ? the lower interest rates will end up saving you a lot of money over time. While you may lose out on the discount offered on the purchase price, you'll still be saving money by avoiding these retroactive interest charges.
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.
Keep in mind that no matter what kind of credit card you use to make a purchase, you should always make sure to pay off your balance as quickly as possible. In fact, it's best not to carry a balance on your credit card for more than 30 days ? this will prevent your having to pay interest. Credit cards can be a big help, but you need to use them very responsibly. - 15224
About the Author:
Steven J. Talrechi is an expert on credit and finance for more than 10 years. He writes about various topics on said field, including applying for a credit card, and different credit card offers.
