Most retail stores give their customers the privilege of shopping with a postpaid credit card. In fact, a credit card is very convenient because it spares you from the agony of having to carry money whenever you want to shop for various items. As a matter of fact, the stores use these credit cards as bait for attracting new customers. They are actually the ones that request you to use their store credit cards. While a credit card gives you the advantage of buying all the stuff that you need even when you don’t have a single cent left in your pocket, there are a few things that you must consider before bowing to such an offer. This is due to the fact that there are some credit cards that work against your interests. Here are some tips that can help you in knowing whether a store credit card is really worth it or not.
1. Focus on Interest Rate
It’s important you factor into a credit card’s interest rate before taking it. In case you are not in the know, credit card companies make money by charging you an interest on top of your credit card debt. The longer you take to pay the debt, the more money you will have to pay due to accumulated interest. Most companies even swear that they don’t charge any interests on their cards. That’s actually a white lie. Even if they don’t a dime, it’s only for a short period of time.
Besides that, you should check whether the card features a fixed or a varying interest rate.
The advantage of a fixed interest rate is that it never changes regardless of the situation of the economy. You can therefore predict the interest you will pay from January to December. Varying interest rate keeps changing, which makes it difficult to predict the money you will pay every month. At the end of the day, you want a store card with the lowest interest rate.
2. Spending Habits
Your choice of a credit card should be guided by your spending behavior. This is because there are different cards for people with different spending habits. If you are certain that you will be able to pay your credit debt in full at the end of the month, you can afford to opt for a card with a high interest rate because it will only be a small amount. However, if you are not able to clear your balance every month, it’s advisable you pick a card with a low interest rate so that you don’t end up paying a lot of money due to roll over debt.
3. Credit Limit
Credit limit refers to the amount of money that the credit card company can allow you to spend for a given period of time. If the credit limit is too low, then there is no point of signing up for such a credit card. This is because you will be fined every other day for attempting to exceed the allocated limit. But sometimes the issuing company will set a limit according to your credit score. If that’s the case, you should first work towards improving credit score before accepting the card.
You can save a lot of money by using a card that has generous cash back program. However, there are some credit card companies that charge extra money for such incentives. As a matter of fact, a reward that requires you to pay more money is not worth it. You should therefore look for a card that offers rewards without asking you to pay more. You should also check the validity period of the rewards that are earned. The last thing you want is to try redeeming points that have already expired.