For some people, a credit card issued by a departmental store may be a viable option. This type of card has its limitations. Some of the limitations include: Interest-free financing, Cash-back rewards, and co-branding. You should read all terms and conditions before you apply for a credit card at a department store.
There are limitations to a department store credit cards
Loyal shoppers will enjoy many benefits from 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.
The cards do have some limitations that younger consumers may not be aware of. 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. In certain cases, fees and interest rates may be high. This can be a disadvantage for people with bad credit histories.
Cash-back rewards
The department store credit card gives shoppers the chance to earn valuable rewards for purchases at the store. Even though these purchases aren't as frequent as others, they can earn you hundreds of dollars in cashback each year. There are many reward options, including rewards for everyday shopping and special store discounts.
Before applying for a cash-back rewards card, make sure you understand your spending habits. This will help you determine which card is right for you. Different cards have different categories. Be sure to plan your purchases around rotating categories. Make sure to know the eligibility dates and deadlines for each type.
Interest-free financing
A store credit card is a great way to stick to your budget and not go overboard. Paying your bills on time is a must, as high interest rates are likely to follow. Avoid this by paying off your balance in full before the interest-free period expires.
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. Retroactive interest will be added after the promotional period has expired. In contrast, 0% interest credit cards for general purpose purchases usually do not charge retroactively.
Co-branded cards are subject to certain limitations
Co-branded department store credit cards allow you to shop anywhere the store's name is on the card. These cards, also known "open loop" cards, are issued from companies that have partnered with networks like MasterCard Visa American Express. These cards can be used at more than one store and have higher credit standards. They have certain limitations.
A co-branded credit card can be a great way for you to reward yourself for your every day purchases. Points can be converted into discounts at your favorite retailers. You may also be eligible for significant discounts on travel. These cobranded cards are subject to some restrictions.