How many times have you walked into a department store, found the perfect items, gotten up to the counter, and then got hit with, “Apply for our store card and get 10% off today.” Or “Do you want to save 25% on your purchase today?” 10% and 25% are sweet offers to hear when purchasing those perfect items, but are they really that great of a deal?
A department store card from places like Kohls or Home Depot can be helpful for building credit but can also be dangerous at destroying it as well. To play it safe, think about why you are going to get that credit card. Are you turned on by the initial savings, do you shop at that particular store a lot, or is this a means to get what you want and not what you need?
Let’s look into this a little deeper. Are you turned on by the initial savings and how often will you save 10 and 25 percent? Department stores credit cards are known as one time offers. There is usually an attractive introductory interest rate or percentage off your purchase. But that is JUST initially. Investigate the credit card before you sign up at the cash register. Read the fine print. Find out what fees are associated with that particular department store credit card. Specifically looking at interest rates, late charges, over-the-limit fees, and the annual percentage rates (APR).
Do you shop at that particular store often? (ie: Lowes, Walmart or Old Navy.) Whether you answer yes or no, there’s still a lot to consider: What kind of points or sales does that credit card offer, do you build points towards another purchase, or are there special services that you can take advantage of? Can you pay the balance off at the store? So after you select the perfect Valentines Day present and put it on your Target card , you can then turn around and pay for it at the counter? What kind of grace period is attached to that credit card? If you don’t shop there often, consider how many times you have applied for credit cards. Each time, your credit score is evaluated your credit report is affected.
Is this a means to get what you want and not necessarily what you need? You can’t buy necessities like groceries or make payments for the electric bill on a Sears card. Consider how many credit cards you already have and remember it isn’t the number of credit cards you hold but the way in which you pay on them; i.e. paying your total amount due and on time.
After taking everything into consideration, is that department store credit card worth it versus just sliding your debit card or bank card? If you want a credit card that will offer you long term rewards, look for one that offers cashback, travel, or APR incentives on your every day purchases.
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