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| What Are Retailer's Credit Cards? Why Do You Need Them? |
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| Written by Steven J. Talrechi |
| Friday, 09 January 2009 12:18 |
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The ads for them are everywhere. Retailer's credit cards promise to let us buy with no money down and no interest payments for as long as two or three years! Are these retailer's credit cards the great deals that they appear to be? Let's have a closer look at exactly how these credit cards work. 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. 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. You should approach these deals with caution. You need to make absolutely sure that you can pay the balance on these retailer's credit cards in full before the introductory period ends. Otherwise, you could end up paying a fortune in interest and other charges. This can make these purchases far more expensive than the original price! Retailer's credit cards typically bear interest rates which are far higher than are those associated with traditional credit cards. Unless you are absolutely sure you can pay in full before the end of the introductory period, don't sign up for these retailer's credit cards in the first place. It is better by far not to get into debt in the first place and to pay cash for these purchases. If it simply is not possible for you to pay for these purchases in full upfront, use a traditional credit card instead and pay off the balance as quickly as you can. You may not get a deal on the purchase price of the item, but you'll save yourself a lot of money in interest payments over the long run. 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. Finally, remember that no matter which credit card you use, you're going to end up paying a lot in interest charges if you don't use responsibly. So shop carefully, and pay down your credit card balances as soon as you can; in fact, it's a good rule of thumb to have that you never carry balances on credit cards for more than 30 days. Credit used responsibly can be a good thing, but you have to be careful just two you get it from. About the Author: Steven J. Talrechi is an expert on credit reporting for over 10 years. He writes about various topics on said field, including applying for a credit card, and different credit card offers. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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