A department store credit card can be a good choice for some customers. This type of card has its limitations. Some of the limitations include: Interest-free financing, Cash-back rewards, and co-branding. Before you apply for a department-store credit card, be sure to carefully read the terms.
A department store credit card has limitations
The loyalty program of a department store credit cards offers many benefits to customers. These cards are well worth the investment as you often receive big discounts or promotional interest rates. If you aren't planning on frequent purchases from the same shop, a general rewards card or low interest credit cards may be a better option.
But these cards may have restrictions that young people might not be aware of. Your payments may be higher and you might not be able pay your purchase on time. In some cases, you will have to pay high interest rates and fees. For those with poor credit histories, this may be a disadvantage.
Cash-back incentives
A department store credit card offers shoppers a great opportunity to rack up valuable rewards on purchases made at the store. Although these purchases may not be as frequent than other types of purchases they can still earn hundreds of dollars annually in cash back. There are many reward options, including rewards for everyday shopping and special store discounts.
Be sure to understand your spending habits before you apply for a cash back rewards card. This will help to determine the card that is best for you. Different cards have different categories so plan your purchases around these rotating categories. In addition, make sure you know the deadlines and eligibility periods for each type of reward.
Interest-free financing
Having a store credit card can help you stick to a budget and avoid going overboard. However, you should be aware that high interest rates will quickly rack up if you don't make your payments on time. You may want to avoid this problem by paying off your balance before the interest-free period expires.
Store cards may have special financing terms that eliminate interest for a set period. This is sometimes called "deferred Interest" and it applies to balances that are paid within a specified time period. Retroactive interest will be added after the promotional period has expired. However, general-purpose purchases made with 0% APR credit cards typically don't have retroactive interest.
Limitations on co-branded Cards
You can shop anywhere that the store's name is listed on your co-branded department store card credit cards. These cards, also known by the "open loop" card, are issued to customers who are part of networks like MasterCard, Visa and American Express. These cards often carry higher credit standards and allow you to make purchases at locations other than the store. There are some restrictions.
It's a great way reward yourself for all your purchases. You can earn points that can be used toward a discount at your favorite retailers. They may even be able to give you substantial travel discounts. These cobranded cards are subject to some restrictions.