Here’s an great example of when using a store credit card was an excellent idea. A colleague of mine was planning for his wedding and, after visiting a number of suit rental shops, was leaving the mall and went through a Macy’s department store. It just so happened that it was one of their biggest sales days of the year and he decided to take a look at suits there.
Well as luck would have it he found the perfect suits for both himself and his groomsmen and also found out that he could save an additional 15% that day, plus get cash back, by signing up for Macy’s store credit card.
He did and was able to buy not only his entire outfit but everything for his four groomsmen at a price that, in any other store, with only pay for a single suit. Due to the sales, discounts and rewards that he received by signing up for the Macy’s store credit card, he saved almost $1000.
When the bill came due later that month, he wrote out a check to pay off the entire balance.
And that’s a great example of when using a store credit card was an excellent idea.
By paying off everything immediately my friend saved literally hundreds of dollars in interest fees that he would have paid if he only paid the minimum every month until the bill was paid off. In fact, if he would have only paid the minimum he would have ended up paying much more than what he saved.
Here are another couple of instances when using a store credit card might be beneficial.
If, for example, you are making a large purchase and a store is offering 15 to 20% off for signing up for their loyalty card, you might end up saving quite a bit of money but only if you pay off the bill in full when it’s due. For example, if you’re purchasing a lawn tractor from Home Depot that costs $1000 and they’re giving 20% off for signing up for their loyalty card, you’ll save $200!
A loyalty card is also worth getting if you visit the same store many times. Many of them offer cash back bonuses, birthday coupons, special discounts and other excellent perks that, over time, can add up.
Keep in mind that, with most loyalty cards, if you don’t pay it off in full any discounts that you might receive will no doubt be negated by interest costs and fees. If you aren’t confident that you will be able to pay off your bill in full, you shouldn’t even consider signing up.
It’s also a good idea to pay off your bill as soon as you make a purchase. The reason is that most loyalty cards won’t allow you to use automatic payments through your bank, so not paying them off right away may result in a late payment.
Frankly, as long as you have a good grasp of your finances and can pay off your bills on time, every time, using a store credit card can be advantageous. If you don’t, and you can’t, then you really shouldn’t.