It is important to remember the following things as we are bombarded with store credit card offers during the holiday season.
A few tips to keep in mind:
- Deferred interest deals are often something used to lure in new customers, but could leave your bank account hurting. In many cases, if you miss a payment, or don’t completely pay off the purchase by the end of the introductory period, you can be charged interest on the entire purchase price, for the entire length of that elapsed introductory period, ouch!
- Not only can deferred interest take a toll on your wallet, your credit score could be lowered significantly if you were to open up lots of store accounts, even if you have the intent to close them. Opening up an account requires a credit score inquiry which has a (small) ding on your score. Having a lot of accounts open also increases your appearance of “risk” to other lenders, because you could take on debt up to the total of those card limits, at any time.
- Holidays are at high risk of scams! Shopping over unsecured wireless networks can put your bank and/or credit card information out there for anyone fishing for it. It’s best so shop online on only secured (password protected) networks, like your password protected Wi-Fi at home!
- Store credit card interest rates can be as high as 25% or more, which is almost double the rate of a regular credit card, which is often around 15% interest.
- Running a high usage on a lower-limit card will negatively affect your utilization part of your credit score calculation, even if you pay it off each month since credit score snapshots can be taken at any time of the month.