A credit card from a department store can be a good option for some consumers. These cards have some limitations. The limitations include cash-back rewards, interest free financing, and cobranding. You should read all terms and conditions before you apply for a credit card at a department store.
Limitations for a departmental store credit card
Many benefits are available to loyal customers with a department-store credit card. You can often get promotional interest rates and big discounts, which make these cards a worthwhile option. A general rewards credit card or low-interest credit card might be better if you don’t plan to make frequent purchases at the same store.
Young consumers might not be aware that these cards have certain limitations. There are some cases when you may not be in a position to pay the full amount due to delays. In these cases, your monthly payments might be higher. You might have to pay fees and high interest rates in certain cases. This may be a disadvantage for those who do not have good credit history.
Cash-back incentives
The department store credit card gives shoppers the chance to earn valuable rewards for purchases at the store. Though these purchases may not be as frequent as other types of purchases, they add up to hundreds of dollars in cash back annually. You have a variety of reward options, from special store discounts to rewards on everyday purchases.
Know your spending habits and make an application for a cashback rewards card. This will help you choose the right card for you. Different cards have different categories. Be sure to plan your purchases around rotating categories. Also, be sure to understand the eligibility periods and deadlines of each type.
Financing without interest
Having a store credit card can help you stick to a budget and avoid going overboard. You should also be aware of the fact that late payments can lead to high interest rates. You can avoid this problem if you pay off your balance by the end of the interest-free term.
Some store cards offer special financing terms which waive interest for certain periods. The "deferred interest" is a term that refers to interest-free periods. It applies only for balances paid within a specific time. 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.
Co-branded cards have their limitations
The co-branded departmental store credit cards let you shop wherever the store's name appears on the card. 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 can be used at more than one store and have higher credit standards. They do have limitations.
The co-branded credit card is a great way of rewarding yourself for making every day purchases. Points can be converted into discounts at your favorite retailers. They can even give you significant travel discounts, too. These cobranded cards are subject to some restrictions.