Many department stores or large retail chains offer their own credit cards to shoppers looking to take advantage of holiday deals. Typically, these cards provide additional discounts or rewards to frequent shoppers when used exclusively at their affiliated stores or merchants. Many of them also include special offers without interest or deferred interest on purchases made during a promotional period.
When you are thinking about applying for a store credit card, consider the same things that you would take into account with any other type of card:
- Will you be able to pay your balance in full each month?
- If there is any deferred interest promotion, will you pay off the deferred balance in full before the promotional period ends?
- If you can’t do it; How much would the credit cost you? Does it fit in your budget?
- Do you have multiple credit cards? If so, do you want to get one more card?
Here are some tips and guidelines to keep in mind so you can enjoy the benefits while reducing the risks of falling into credit card debt.
Keep an eye on your spending during the holidays.
One way to avoid overspending on your credit card during the holidays is to budget for your purchases. Remember, if you don’t pay your credit card balance in full each month, interest will accumulate, and each purchase could end up costing you more.
You may get discounts, prizes, or coupons for your purchases, but you must think about the real value of these credit card benefits compared to the amount of money you will owe if you do not pay the card’s full balance each month.
Pay your bill on time
Paying late can cause you to incur interest and penalties that can accumulate; also, the delay in your payment will appear on your credit history and could negatively affect your credit score. Lenders use your history and credit scores to determine the interest rate they would offer you, so it is important to keep your record smooth and thus have and maintain a good credit score.
Limit the number of cards you order
Making a lot of credit applications could mean to the credit reporting companies that there has been some change in your financial situation.
Another good rule of thumb for building and maintaining a good credit score is applying for the credit you need. Opening too many lines of credit in a short time, such as during the holidays, can harm your credit score.
Getting too close to your card’s credit limit can lower your credit score.
Another good tip is not to get too close to your card’s credit limit. Store credit cards tend to have a very low limit, which means you could fill them up in one purchase. Experts recommend only using up to 30 per cent of your available credit limit, so before making any purchase, make sure you know your card limit.