Are Retailer Credit Card Rewards Worthy of Your Interest?
You know the holidays are upon us when retailers begin pulling out all the stops with their credit cards. Great deals for opening a retail credit card; great deals for using your retail credit card; and special bonuses, coupons and shopping events for being a cardholder are just a few of the things that retailers use to entice us into using a retail credit card.
However, are retail credit cards all they are really cracked up to be?
You may find it all a bit too tempting when you go to make a purchase and a store associate tells you that you can open a store credit card within minutes and save as much as 20 percent on your purchase. This is usually the time when you must make a decision regarding the advantages and disadvantages of owning a retail credit card.
Weighing a Discount vs. a High Interest Rate
If you know, unequivocally, that you will pay off your credit card purchase when your first statement comes then it may be worth your while to open a retail credit card account. However, if you even have the smallest inkling that you may not be able to pay the balance in full then you are probably better off passing on using a store credit card.
This is because retail credit cards come with notoriously high interest rates. In other words, any discount that you may have received for opening a new account will likely be erased the first time you are unable to pay your bill in full.
Too Much Temptation
Another factor to consider is your spending habits. Many times, individuals armed with retail credit cards are likely to spend more than if they were using another form of payment.
You may find yourself making more frequent purchases, purchasing more expensive items or simply purchasing more than you otherwise would have if you were paying with cash, for example.
Consider your Credit Score
Although a nice payment history on a store credit card may bode well for your credit score, missing even one payment may have a strong impact on your credit score, in a negative way. Plus, retail credit cards have lower credit limits, which may just not make much sense when you have a perfectly good major credit card with a low, fixed interest rate.
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