Advantages and Disadvantages of Store Cards

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Advantages and Disadvantages of Store Cards
We all love a bargain and when we're faced with a store card offer at the sales counter as we make a purchase, the temptation can be difficult to resist. At face value store cards can seem appealing - discounts on purchases, invitations to promotional and preview events, extra money off in the sales, and glossy member magazines - and after all, they're just another credit card, aren't they? In fact, no, they're not just another credit card. Although they may offer some tempting perks, they can be very expensive methods of borrowing that can lead to spiralling debt if the balance isn't paid at the end of the month. There's no reason why you shouldn't open a store card account if you're sure it's going to be an appropriate financial arrangement for you - but you should weigh up all the pros and cons carefully before you make any decisions.

Check interest rates and hidden fees:

Lurking behind the fabulous special offers and discounts are various potential charges and fees that could send your debt soaring out of control. For a start, the interest rates can be more than double those of bank credit cards - sometimes as much as 30% APR. And then there's the hidden charges, which can really catch you unawares. Watch out for penalties for late payments or for defaulting on payments. Some cards even charge interest from the purchase date if you don't clear the balance at the end of the month.

Pay off the balance if you can:

Why shouldn't you take advantage of the offers if they're there for the taking? You could save a lot of money by opening a store card (for example, discounts of up to 20% may be offered with your first purchase), as long as you are sure that you will be able to pay the bill before interest is charged. Check what the bill period is - it's normally 30 to 50 days. Also find out whether there's an interest-free introductory period.

Work out a budget:

If you plan to spend a lot using the store card, work out a monthly budget of how much you will need to set aside to pay the bill, to determine whether you can afford it before you sign up to anything.

Investigate other credit options:

Store cards seem to easy to set up - just completing a short form in front of a sales assistant who'll make a quick phone call to arrange it all for you - but these days it's really not difficult to obtain credit from a bank, and you'll normally get better rates with a bank credit card than you would with a store card. Shop around before you make any decisions - investigate what the banks have to offer.

Don't be afraid to ask questions or say no:

Sales assistants can be quite persistent - they're often on commission for the number of store card accounts that they open. Don't allow yourself to be bullied by them. Feel free to ask any questions and take as long as you want to mull over it. In fact, you don't need to sign on the spot - take the forms and documentation away so that you can examine them in detail at home before making your decision.

Don't go overboard:

One store card might be tempting, but don't get carried away. The more store cards you have, the more difficult they'll be to manage and keep track of - and that's when your debts can start to spiral out of your control.

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Eliminate Credit Card Debt

To eliminate credit card debt is amongst the best thing you can achieve for your finances. Getting into debt is very simple, but getting out of debt is a lot harder. Though it may be difficult, eliminating credit card debt can be possible with the right type of help.

If you have a minimally sized debt you can combine your balances onto one card that offers a limited time period of no interest. If your credit rating is good then there are many firms who will give you this option. Most credit card companies do such an introduction that usually lasts anywhere from 6 months to one year. You should have plenty of time to get rid of your debt by paying off the debt and not any interest or other charges, dependent of course on the size of your balance. However, if you have large credit card debt then this may cause more problems when the zero percent interest period is finished and interest starts to be charged.

With bigger balances you can either get a home equity loan or invest in credit counseling. A home equity lone can only help you when the balance is large and you are unable to avoid interest rates on your card. With a home equity loan you can get a lower interest rate by dealing with a bank and pay the card balance off totally. However, if this is not manageable then you should use credit counseling or a credit eliminating company. The credit counselors can negotiate lower monthly repayments with the credit card firm and make sure all your money goes to pay the debt only and not any interest. Only use credit-eliminating companies as a final dire option and for very severe circumstances. They will work for you to negotiate with card firms to write off your debts without any payments.

As you are now aware, there are varied options for debt relief that can help you to eliminate any credit card debts. If you take the time to phone, do any paperwork, and have the will to do it, you can resolve this type of debt considerably faster than by simply paying the bare minimum as required on your credit card bill.




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Advantages and Disadvantages of Store Cards
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