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. Before you apply for a department-store credit card, be sure to carefully read the terms.
Limitations of a department store credit card
Many benefits are available to loyal customers with a department-store credit card. These cards offer great discounts and interest rates, so they are worth considering. You might prefer a general rewards credit card with low interest rates or no interest if you don’t intend to frequent shop at the same place.
However, these cards have limitations that young consumers may not know about. Some cards may not allow you to pay your bills on time. Your monthly payments could be higher. You may have to pay higher interest rates or fees in some cases. This could be a disadvantage to those who don't have good credit ratings.
Cash-back Reward
A department store credit is a great way to get valuable rewards on your purchases. Although these purchases may not be as frequent than other types of purchases they can still earn hundreds of dollars annually in cash back. You have a variety of reward options, from special store discounts to rewards on everyday purchases.
Be sure to understand your spending habits before you apply for a cash back rewards card. This will help you determine which card is right for you. Different cards have different categories so plan your purchases around these rotating categories. In addition, make sure you know the deadlines and eligibility periods for each type of reward.
Interest-free financing
A store credit cards can help you keep within your budget without going overboard. If you fail to make your payments on the due date, high interest rates can quickly add up. This problem can be avoided by paying your balance off before the interest-free period ends.
Store cards may have special financing terms that eliminate interest for a set period. The interest-free period (also known as "deferred in interest") applies only to the balances paid within a set period. The interest will become retroactively due to expire the promotional period. In contrast, general-purpose credit cards with 0% APR typically do not charge retroactively.
Limitations on co-branded Cards
Co-branded department store credit cards allow you to shop anywhere the store's name is on the card. These cards, also known as "open loop" credit cards, are issued by companies that have partnerships with networks such as MasterCard, Visa, and American Express. These cards have higher credit standards and can be used to purchase at other locations than the store. They have certain limitations.
The co-branded credit card is a great way of rewarding yourself for making every day purchases. You can redeem points for a discount at your favorite retailer. You may also be eligible for significant discounts on travel. However, co-branded cards come with some restrictions.