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Department Store Credit Cards: Building or Damaging Your Credit?
As one needs to establish credit, he usually regards a number of credit cards easy to get, among which there are a variety of department store credit cards. Though these cards have high rates and fees and low credit limit, they are easily given to customers inevitably damaging their credit history, under certain circumstances.
If you want to build your credit and make your shopping easier rather than hurt your credit score and get stuck in debt, you should understand the features of store credit cards and learn how to use them wisely. Read our short review and several tips for using department store credit cards.
What a department store credit card has to offer
Store cards are numerous as each big retailer is eager to issue a credit card. So if you are a frequent buyer at some definite retailer, you can apply for their credit card and shop with convenience. Store credit cards usually work like reward credit cards, providing points, rebates and bonuses, access to presentations and sales which seems to be quite alluring and advantageous.
Easy to get but hard to pay off
To be approved for a store credit card, it's usually enough to have limited credit history. But the interest rates and fees will really disappoint you if you fail to pay your balance off monthly. As interest rates can be more than 20% annually, you have to pay off the balance in full each month to avoid overspending. Recent research showed that over 36% of credit card companies' income is from late fees, so be always on time with your payments on store cards, as the first late payment will increase the rate to 17 percent, the second - over 20 percent etc. while the average interest rate in the USA is 13%.
What's in your credit report?
You can be tempted by the numerous store credit card offers, but it is important to realize that all these requests will show on your credit report and will lower your credit score. Besides, multiple small credit lines, as the potential creditor sees them, are likely to prevent you from getting approval for a major credit card. Keep in mind, you have obtained this card to improve your credit, so send the full payment a week earlier than the due date and be sober when offered a card in the next retail network shop you go.
What you should consider applying for a department store credit card
• If you are really a frequent buyer at this retail network and you need to rebuild or establish your credit, a department store card is your option, since it is easier to get than a bank credit card.
• Before signing the credit card agreement, read and evaluate the terms and conditions of the agreement, the features of the credit card to understand if you want to have this credit card and if you will be able to pay it off.
• Avoid going over the limit and being late with the payments - you will be seriously punished for this with fees and increased interest rates - more seriously that a usual bank credit card would do.
• If you decide to close the account, you should see to the bank's reporting that the account is closed on the customer's request, as only in this case your credit score won't be lowered.
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