Store Credit Cards: Benefit or Money Waste?

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Large department stores and specialty shops have found a way to customers' hearts. In order to attract more new buyers, retailers offer their frequent customers store credit cards. Such cards offer good discounts of about 10% and alluring benefits. Having yielded to the temptation of getting a new clothing item for their wardrobe with a considerable discount, customers just cannot resist getting one of these store cards.

When you spot something that triggers your impulse buying desire, a 10% discount seems to be a nice bargain. And at such moments it is really hard to stop for a while and analyze all pros and cons of this deal.

When signing up for a store credit card you do not debate in your mind such matters as high rates and fees accrued to this type of cards. So, are store cards worth signing up for?

All of us shop. Some hate it, some cannot live without it. And, probably, every once in a while, standing in front of the register with your cart stuffed with all types of goods, you think that it is right about the time to sign up for a store card and get a significant discount.

The motivation of retailers and department store owners is quite obvious. Through offering you their card they boost sales, attract new customers, and get some sort of a guarantee that their regular customers will stay with them for some period of time.

But what are the benefits this store card gives you? When making a purchase you really do get a good discount. Usually it is 10% of the total product cost. A store card can also work as a point rewards credit card. You can earn rewards points and get additional bonuses from that retailer or a department store.

How Store Cards Work

This is how it works. Say you have a Bloomingdale's store card. It gives you a considerable discount on their merchandise. Would you like to overpay for a sweater at some other store? Not really, I guess. So, this is how retailers make you be loyal.

What you should keep in mind. Remember, that, first of all, store credit cards have rather high interest rates. For instance, a Gap credit card has a 21% APR and a higher default rate. This card gives you a chance to earn a 10% certificate.

The next thing you are to consider is that store cards rewards schemes differ. Some store cards enable you to start accumulating points right after you make your first credit card purchase. Under other store cards' terms you will have to spend a significant amount of money, like a $ 1,000 to qualify for rewards, like a $ 25 gift certificate. Does it look like a profitable deal?

In fact, there is no need for you to rack your brains comparing store credit cards and analyzing which one has better terms. Financial experts have found the solution for you. Here is their advice. If you badly need that very gorgeous set of china or the unbelievable 37" diagonal LCD TV with a 10 % discount, sign up for a store card.

What is the most important is that you should better pay off your balance right away, during one month. This way you will not have to lose your money paying interest rate.

However, you will barely disagree that getting a regular credit card deal with 0% introductory rate is way more beneficial. You just buy what you need and pay off your balance with no interest for a certain period of time.

But still, store cards have a right to exist. And signing up for one of them, just do some very simple math - will your discount and rewards make up for the interest rate you will have to pay afterwards.