All You Need To Know About Store Credit Cards
You’re most likely aware of the much-adopted trend of store credit cards – if you have visited any retail stores lately, that is. Store credit cards are for a single purpose and can only be swiped at the retail store that issued it to you. They are sometimes viewed as loyalty cards as well. The cards can come from a clothing outlet to a gas station. As long as the company is providing you with it, it’s a store credit card.
Store credit cards are for a single purpose and can only be swiped at the retail store that issued it to you. They are sometimes viewed as loyalty cards as well. The cards can come from a clothing outlet to a gas station. As long as the company is providing you with it, it’s a store credit card.
Who Is It Good For?
If you’re one of those forsaken ones who can’t keep a balanced credit score, or are too afraid of credit cards, store credit cards might just do the trick for you. With a neglected credit score, you’re most likely to get rejected when you apply for a credit card application. This isn’t the case with store credit cards. Why? Because even though store credit cards affect your score, the retailers don’t ask for a stellar existing score. This works in your favor. With store credit cards you do not have to prove the purity of your past life or how big of a responsible person you are.
There is a plausible explanation for that – most of the retail outlets that issue store cards do it through finance companies rather than renowned banks. A sensible usage of the store card can even lead to you being accepted for the issuance of cards from major banks (even globally accepted ones like Visa, MasterCard, AmEx, etc.stale)
Where Do You Go Wrong?
Mostly, when people apply for store cards, they have planned a “master strategy” to get in and get out. That works by getting a store card; use it to enjoy the introductory (or honeymoon) period of discounts and benefits, and then opt out or cancel your card. However, this may seem like a genius scheme to avoid the lifelong incurrence of an interest rate on your shoulders, the strategy itself is for temporary benefit.
Let’s imagine that you have a questionable credit history. You obviously want to improve it instead of wrecking it further, right? What you don’t know is that opting out of that store card as quickly as possible will have an adverse impact on your overall credit score. You have a chance of having a positive influence on your credit score by keeping a responsibly used credit history. Given that, it’s been maintained for a while. And despite what most people believe, it’s easier to manage a store credit than a regular credit card.
It’s Easier Than Ever
The most basic appeal of a store credit card lies under the amount of time it takes to sign up for it and acquire it. Due to the miracle worker, the internet, it can take as little as two minutes to sign up for a store credit card online. All it requires is your social security number, and there you have it.
What’s Stopping You?
The interest rates! Sure, the initial offers can be mighty fine and attractive, but when it comes to carrying the long term interest rate burden, people tend to back off quite quickly.
Successfully handling a store credit card and balancing your credit mainly depends on how financial your life at the moment of issuance and throughout the holding of the card. Since credit score seems to be the most important factor in the process, why not find out what determines your credit score – it’s based on five factors:
- Payment History (35%).
- Amounts Owed (30%).
- A Length of Credit History (15%).
- New Credit (10%).
- Types of Credit in Use (10%).
As talked about earlier, the length of your credit history has a considerable impact on your credit score, which is why opting out of newly acquired card is bad news for your score. The longer you hold the credibility account, sensible of course, the better your chances look at maintaining a good reputation with the retailer you just received from the store credit card.
How To Use Store Credit Cards Wisely
Now that you know their appeal, you are probably thinking about all the things you want to purchase from your favorite retail outlet. Maybe you even made a list in your mind. You have already walked in that store, and it took all your strength to say no to the salesperson when he/she asked you if you wanted to open a store credit card account to avail all the fantastic offers and discounts on your original purchases. It took all your willpower to do it, but you did it, and you declined the offer.
Which is great, because you now have the chance to learn how to make optimal use of it without causing yourself much damage. Either that or you said yes too quickly and are now stuck with the choice for a long, long time. In any one of the situations, these tips will help you optimize the use of your newly favorite store credit card.
The Lower Your Credit Utilization The Better!
Yes, sounds like the evident and immediate advice that comes off the top of anyone’s head when you talk to them about using your store credit card smartly. But, it’s a little more complex than that. How come? That’s because most store credit cards offer significant discounts on smaller items.
For example, you bought a big item with the hopes of actually getting a substantial amount of discount, but you end up with a huge dishwasher in your kitchen and barely saved any money. Plus, now you have to pay interest on the borrowed amount of money. So, that’s why it’s better to keep a proper track of your credit utilization. Keep an eye and ear out for the kind of products the retail store offers the most discount on if you pay through your store credit card. And use the card to buy those products only. This way, you can keep the card usage to the minimum and target the need to buy.
Don’t Leave Your Card Idle
Your aim should be to spread your spending put all around the month. Do not binge out on the same day, and do not keep your card unused for extended periods of time. It’s a trick you can use to better your credit score. If you leave it free for a long while your service provider might eventually mark it inactive, and you will either have to re-issue the card or go there in person to sort the issue out. When you use your new store credit card regularly, you are in fact building up your credit history slowly and gradually. All promptly, and all in a positive direction!
Do NOT Overspend
The idea of devouring all the right offers while they’re still hot seems like an appealing one. But do not shake hands with the devil. Doing that will only take you down to the heels of a wrecked credit score you cannot recover. Only use your card to make purchases you would have done the card or no card. Do not give into the greed of bending your spending patterns out of shape.
Make Timely Paybacks
If you are determined not to turn your purchasing habits to feed your greed monster, it becomes easy to repay your average credit bill at the end of the month. You can already see how smart spending would benefit your credit score considerably because you shall be able to make timely payments and build up your credit score. You know how long does a month worth of missed payment stay on your credit score? About 7 to 10 whole years! Who wants that? All you have to do to avoid that is do not exceed your spending limit with the store credit card, and the remaining process becomes easier.
What to Watch Out For
With ease comes deceit. It’s no secret, nor is it hard to imagine. If it’s easy to get your hands on a product, then you’re more likely to get it without putting much thought into it. That’s when the room for seemingly little deceit creeps in. Here are a few things you should keep an eye out for in case they come up later to haunt you deeply.
- The interest rates. Most of the biggest retail outlets charge 25-30% interest. The first thing you need to find out. If you’re not ready to pay that much interest, then opt out immediately.
- That sales associate isn’t an expert. No matter how affluent they might seem on the subject, the sales staff that is trying to sell you on the idea is only conveying a messaged memorized off a piece of paper or memo. It’s probable that the information they’re giving you isn’t one hundred percent authentic, and since they do not understand the technical working well themselves, how are they to communicate that to you? It’s always good to do your research.
- Their strategy is targeted towards young shoppers. Their store card marketing strategy is directed towards the youngsters. Why? Because more often than not it’s college students battling student loans and personal expenses who go for store cards. Since that’s their major target, their discount offers are also formulated around the same age group. Look carefully into the offers before opening a store account.
- Don’t forget that this is, indeed, debt. The enticing idea can be deceiving, blinding at times, but do not forget that this is a form of credit card and does come with similar consequences.
Why SHOULD You Get a Store Credit Card?
Store credit cards are often bad-mouthed and don’t have a great reputation – and all for good conditioning, nonetheless. But that doesn’t mean they’re all bad. As we have already discussed, if used the right way, they can end up being extremely beneficial to your financial situation. It’s a good reason to become a responsible shopper!
Here are a few exact good reasons to get yourself a store credit card right away.
Build UP That Credit!
You’re on the verge of bankruptcy. No bank will accept your credit card application. Take that chance and open your store credit card account as soon as possible. Chances are, if you need to take this way out, you’re already low on cash. So, use that in your favor and become a misery, all the while getting rich in credit score!
You Can Save A LOT On Single Purchases
If the store card allows you a 15% discount and you just made a purchase of $1000, you just saved yourself $150! That’s huge! Make sure that you use your store credit cards on these one-time massive purchases.
You Will Become a Loyal Customer
This benefit works both ways. They get a regular customer, and you enjoy the perks that come with being a regular and loyal customer. Get ready for various attractive coupons, vouchers, special seasonal discounts, anniversaries, the whole shebang!
Come holiday season, and you will be bombarded with so many offers to choose from, that you would want to take them all at once. But brace yourself. The key to making anything beneficial to your cause is to be patient and diligent. Few of the most world famous outlets like Amazon, Gap, Target, and much more offer the best discount packages on their store cards. You must have to get your hands on them before they run out of subscriptions to hand out. Many store credit cards come with exclusive club memberships of only the most loyal customers of the retail brand. They hold special meetings, annual events, and meet ups with different people. Instead of gifting your kid with a regular credit card, get them a store credit card of their favorite outlet. They will never stop thanking you – repeatedly.
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