While the holiday season is one of the more common times that consumers typically sign up for retail credit card options, due to the fact that there can be benefits and price reductions on purchases, there are consumers who are constantly signing up for credit cards from their favorite retailer due to the fact that they can save money and get discounts on various items. However, many consumers have wondered whether using these types of cards is beneficial due to the fact that they can have drawbacks that come with these awards and perks, but the question of does the good outweigh the bad is usually something that advisers often want consumers to consider.
Again, many retailers offer their credit cards and will discount purchases up to a certain percentage for cardholders or offer rewards programs and special offers, but there can be problems related to retail credit cards since, as with any credit card, these types of lines of credit can affect one’s credit history and their overall financial life. While there are numerous consumers who are able to use their retail credit card to make common purchases, there are some instances where an unsecured card which is already used by consumer may be a better bet when it comes to simply making purchases from time to time.
One of the drawbacks that many consumers have concerning both retail credit cards and unsecured cards is they do not take into account that repaying these debts is associated with an interest rate which can cause overall costs to rise if the full amount on the card cannot be paid off when the bill comes due. Yet, for those who are have unsecured credit cards which can be used at various retailers this may be a better option since whenever a consumer enters into a credit card agreement with a store, their retailer typically looks into their credit report, which when done multiple times during a year, could cause a consumer’s credit rating to decrease.
There are also advisers who feel that opening these types of retail credit cards can be troublesome because they will lower the average age of the accounts associated with your credit history which, again, can cause one’s credit score to suffer as a result. Also, since retail credit cards may have a low credit limit, and many cardholders often get close to this retail credit card limit, this can lower one’s credit utilization ratio simply because the overall amount of credit available to a particular consumer will only be increased slightly if the overall debt on a particular retail card has also been close to maxed out.
While there are some individuals who may be able to handle any of these drawbacks related to retail credit cards, advisers still prompt consumers to be cautious about signing up for these credit card offers and maxing their line of credit at a particular store. There have been consumers who have simply acquired one or two credit cards with retailers that may offer various goods and services, which can mean that more purchases are made over time, and with responsible credit card use, this can reflect well for a cardholder in some cases. However, caution must be taken as simply saving a few dollars on purchases with a retailer from time to time could cause damage to one’s credit history and score that will cause costs related to one’s credit like a car loan or a mortgage to be much more expensive.