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Retail Department Store Credit Card

Don’t apply for a credit card if you need a home mortgage or personal loan the next year. The reason – applying for a new card can make a dent in your credit standing.

Don’t have anything to show on your credit report? Get a credit card as soon as possible. The two sides, contrasting to each other, signify how your decision on credit cards can affect your financial future.

A credit card, unlike a charge card or cash card, need not be paid in full every month, though all the three are instances of plastic money, which, in relation to cash, is easier to carry and safer to use as a means of payment.

What is a credit card? Well, it works like an account that allows you to take out money and replenish it for further use subject to some limitations. The card issuing company creates a revolving account and grants a line of credit to the user. Interest is being charged on continuing balance of debt.

Store Credit Card

Credit cards have traditionally been issued by the banks and finance companies. Big retail and department stores have also begun to issue credit cards, offering exclusive benefits when consumers make purchases at stores of which they hold the cards. Walmart, Lowe’s, Best Buy, Kohl’s, Victoria’s Secret, Macy’s, GAP and Nordstrom are some of the most popular store credit cards in the United States.

It is always a question whether or not you should go for a store credit card. It may be a better or a worse choice as compared to the one issued by a bank depending on an individual’s buying habits. If you are a shopaholic and are loyal to a particular retail brand, you may want to have one as you may be able to save big, availing the store’s promotional offers, discounts and other perks. The downside is that you may often find it difficult to avoid spending temptation and limit your purchases within your budget.

What if your purchases are not limited to one particular store? Obviously, it is not possible to own each and every store credit card that is out there in the market. A general credit card, such as Chase Freedom, seems a more prudent choice in this scenario. Also note that store credit cards are usually lower in credit limits and higher in interest rates than those issued by a bank. A store credit card, however, can be easier to obtain, helping someone build a credit history and become eligible for home or personal finance.

When is the right time to apply for a store credit card?

The following are some general conditions when it makes the most sense to go for it.

  • Get it when you need it for credit building.
  • Get it when you want to save on you purchases from a particular store.
  • Get it when you don’t need a personal or home finance now.
  • Get it when you are confident of making payments before interests begin to accrue on the balances.

When should you avoid the temptation of having yet another store credit card?

Don’t get tempted for the introductory discounts offered on a new store credit card. Take time to analyze your financial situation before you can say "yes" to such offers. Here are some guidelines.

  • Don’t go for it if your purchases are not limited to one particular store
  • Don’t go for it if you can’t control your shopping impulses.
  • Don’t go for it when you already have a host of other plastic cards.
  • Don’t go for it if you fear of a default on your payments.

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