Sunday, June 19, 2011

The Best & Worst Store Credit Cards

Guest post by Emily Esper

Most department stores have credit cards. They try to entice you into applying for their card by offering some sort of incentive. They are very easy to get, and when money is tight, credit cards seem to be the answer.

Advantages of Store Credit Cards

Store credit cards do have their benefits. Some of the advantages are as follows:

• They are easier to be approved for. They do not perform a strict credit check in order for you to get a card.
• You can build your credit history.
• Most stores allow you to do financing on larger items with no interest charges for a certain time period.
• Stores offer many discounts and promotions if you use your card.
• You can normally get reward points on your purchases.

Disadvantages of Store Credit Cards

The store attempts to try to persuade you to get their card. However, having a store credit card is not all good, as there are many disadvantages to being a cardholder of a store credit card:

• Some stores provide an open line of credit, which can affect your credit history in the future.
• Compared to regular credit cards, the fees and interest rates are very high.
• You can only use them at one store or chain.
• They can lower your credit score.

Best Store Credit Cards

• Kohl’s: There is no annual fee, and they give great incentives. They have coupons sent to you regularly, and are always having a sale. You can receive at least 12 discounts each year at 10 percent, and you receive 15 percent off of your first purchase after you apply for a card. However, the interest rate is high. The normal fixed rate is 21.9 percent.

• Visa by Chase: There is no annual fee, and it is accepted everywhere. You can get free shipping on purchases of $25 or more, and you can also earn rewards on gift cards. For every 2,500 points that you receive, you will be issued at $25 gift certificate. The interest rate depends on your credit score, but it is usually between 18.24 percent and 21.24 percent.

Worst Store Credit Cards

Wal-Mart: The introductory APR is only for the first $250.00 and must be made before a certain date. The normal interest rate is 22.99 percent. One benefit is that you do get .3 percent off of gas purchases. However, it is not available at every Wal-Mart station.

• Macy’s: The interest rate on a Macy’s card is 23.99 percent. Some Macy’s cardholders also complain that the billing statement is difficult to understand, and sometimes people pay the wrong amount. The older generation also says the print is too small, thus hard to read. You can get a 15 percent discount once you are approved, and it does offer excellent discounts and coupons.

Credit Card Bankruptcy

Because store cards are so simple to get, many people think that they will be a solution to their financial problems. However, if you are not careful, they could get you further into debt, and before you know it, you have too many bills to pay and do not know where the funds are going to come from.

If your credit card burdens become too great, you could be forced to file credit card bankruptcy. Therefore, you need to budget carefully when getting a credit card to make sure that you are not getting in over your head.

You need to decide what is best for you. Research your options, and make sure that you read the fine print.

Thanks, Emily, for your contribution to Mommy Rantings! Have you had any experience with store credit cards? Which ones have been good and which one have been nightmares?

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