Department Store Credit Cards
Department Store Credit Cards - Read the Fine Print
Department stores love to sign people up for their own specialized credit cards. Very often, they will make offers of 20% to 30% off your purchase with your new "Enter Store Name" credit card. What they fail to explain and hide in the small print is that after the first 2 or 3 months, the interest rates rise to 20% or more.
Unless you pay off your purchases immediately, you'll be paying the 20% to 30% savings you got from signing up for the card, and more, in these absurdly high interest rates. This type of debt is also considered bad debt - clothes or durable goods purchased on a high interest credit card are immediately worth less than you paid for them, so unless you pay off the entire balance each month, you are incurring bad debt.
Department Store Credit Cards - Establishing your Credit
When properly used, a department store credit card can be a good tool for young people who need to establish a credit history. Every new credit card user should do their best to educate themselves on the business of credit. If you can't get through the fine print in your credit agreement, call the company (they always have a toll free customer service number) and ask them to explain the rate of interest you'll be paying. Ask them what happens to your interest rate and what penalties you are charged when you are late for a payment. Ask what penalties are involved if you miss a payment.
You'll very likely be informed that in the event of a late payment or missed payment, your interest rate will rise to 25% or 30% with penalty late fee as well.
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