pros and cons of credit card

There is a huge difference between the conventional credit card and a store credit card. So, before you get caught up in the million and one promises of what you stand to gain when you sign up for a store credit card, it’d be rational for you to have a fair knowledge of the pros and cons that surround the usage and ownership of this form of credit card. So starting with the bright side, let’s take a look at the pros of signing up for a store card in America.

Pros

There are a thousand and one benefits that accompany the ownership of a store card. Firstly, even though store cards are generally different from the regular credit cards, some of them can actually be used as a mode of payment outside the accredited store. When you sign up for a store credit card, you’re open to a wide array of benefits like in getting rewards and even cash backs from the store that owns the card. As if that’s not enough, you can afford to partake in their trade deals, use coupons while shopping, and even return an item if anything went haywire with it, without having to present any form of receipt to the store.

On top of that, even though every store does actually carry out a credit score check, before approving a card request, some store credit cards in the U.S nevertheless, do accept people with even low credit score. In other words, if you’re the type who is battling with a low credit score, and you’re looking for a way to rebuild it, taking a store credit card would go a long way to help you reach a remarkable credit score.

Cons

Limitation

The very thing of course people don’t like about a store credit card is in its limitation. Unlike the regular credit cards where you can afford to use it anywhere, store credit cards are most times only limited to the store alone. However, there are some exceptions though.

Higher Interest Rate

This is a well-known fact about store credit cards. When it comes to their interest rate, most are often very high. For instance, where a regular credit card could charge 13% as an interest rate, a store credit card could charge up to 20% in monthly interest. Thus, if you’re the type that isn’t really down to paying higher interest rate, then it’d be best for you to avoid getting a store credit card

Dynamic Interest Rate

Now, not only are store credit card interests often higher than the conventional ones, there are dynamic. Dynamic in what sense? When a new month rolls up and you perhaps failed to pay up your balance for the previous month, your interest rate could increase from 20% to 21.5% depending on the store in question. So, unlike a regular credit card’s interest which is often fixed by the company, the same can barely be said of a store credit card.

Annual Fee

Another discouraging factor to keep an eye on when thinking of getting yourself a store credit card is that most of them do come with annual charges. Are you sure you’re ready to go down that road? Think hard please!

Things to Consider

So, if after every point we’ve discussed above hasn’t gotten to you and you’re still bent on getting a store credit card, then there are some things you ought to take into consideration. Things like, the interest rate of the card and if it has an annual fee or not. Thus, any store credit card deficient in these two aspect should be completely avoided. By the way, you need to know that owning a store credit card is the easiest way to engage in impulse buying, and we all know what impulse buying can do to our finances. Do you really want that?

Leave a Reply

Your email address will not be published.