Posts tagged: charge_cards

Pros And Cons Of Department Store Credit Cards

Credit cards come in several different forms. There are charge cards, credit cards, rewards cards, and etc. One of the most used kinds of credit cards are department store credit cards. They make it easy and convenient to buy things on credit from your favorite clothing, jewelry, hardware stores, and from several other places which things you would otherwise not have been able to buy. Still, are you really getting a good deal by using a department store card, or would you be better off using a regular card? Here are a few advantages and disadvantages of buying things using department store credit cards.

PROS

Savings

Buying things from a department store using the card specifically designed to use at those particular stores can sometimes save you money. Depending on the department store, you may be able to get a certain percentage, or a certain amount of money back for a certain amount that you spend on a purchase. In this aspect, it is much like a rewards card, though it is only limited to purchases and savings within that particular department store.

Other rewards

Some department stores allow you to receive free amenities when you use your card to buy things online or from a magazine. Services such as shipping and handling and/or free gifts sometimes come with your purchases when you buy an item from a store with its credit card. This can be bought on the internet, over the phone, and through magazines, all being delivered by mail to your home.

CONS

High Credit limits

Having several department store cards with limits that you think are not very high can actually add up to be quite a bit. Having even small amounts on your department store credit limits becomes one large limit, which can make it difficult to get a major credit card. Having such a high credit limit because of your combined department store cards ties up your credit line and only allows you a small amount in which you can add another credit card.

High interest rates

Some department store cards have high interest rates that end up costing you more than you bargained for. Sometimes even the rewards do not make up for the money you spend on interest just to get these cards. Making late payments on these will also allow department stores to shoot your rates sky high, so you have to pay on time, or the card will be more of a burden than an advantage.

No rewards

Department store credit cards are more dangerous than they are useful when they do not give you something back for what you buy. Just being able to buy it on credit is not worth it, and can get you into financial trouble that you do not need. Get a card that allows you to save money on the products that you buy, and keep only those cards. Once you pay them off, don’t keep them. Having these cards will tie up your credit line and make other cards difficult to acquire.

How Do Charge Cards Differ From Credit Cards?

You have probably often heard of a credit card being called a charge card. Or you may have heard of a charge card being called a credit card. Many people believe that they are the same thing. However, the two are quite different.

1. One difference between a credit card and a charge card is that credit cards allow you to have a balance. Charge cards do not, because they require that you pay in full the amount that you charge on an annual basis. This is how credit cards can be used for long periods of time without ever being paid off, though payments are made monthly that may reduce the balance, but never actually eliminate it. With a charge card, you must pay off the amount you owe periodically, no matter how great the amount is.

2. Another difference is that credit card holders must pay interest fees. This is because the card holders are not required to pay their debt in full periodically. They only have to pay the minimum monthly requirement. Interest is where credit card companies make their money. Though they do not require you to pay your bill completely by a certain deadline, they do charge you interest for the entire time that you do not have it paid off.

3. Credit cards give you the opportunity to pay off your balance whenever you want, but charge cards have more rewards. There is such a thing as a rewards credit card, but many charge cards outweigh these in benefits.
Depending on who the card holder is and what their spending habits are, preferences between charge cards and credit cards differ depending on the person. The different aspects of each can determine which one is the best for you.

Credit cards

Credit cards are beneficial to you if you need to buy on credit and can afford to pay on a balance along with the interest fees. It can be better to have a credit card because they have no annual fees and they allow you to pay off your debt when you like.

Charge cards

If you are the kind of person who would be able to pay off your debt when the card company requires it, charge cards are a good investment. They allow you to buy things that you cannot pay for now, but because of the periodic pay off requirement, it keeps you from getting into debt further than you can escape from.

Whether you are willing to pay on interest rates and be allowed a credit balance or pay annual fees and get great rewards is up to you. Depending on what kind of spending you need to do and how well you will be able to pay it back are big factors to consider when comparing the two types of cards. There are benefits and pitfalls to both sides, but if you manage either or both of them wisely, you will be able to reap the benefits they bring and control the expenses they incur.