A store gives you 20% off in exchange for a quick credit card application. This may not sound like too much of a big deal, but it’s important to read the fine print before signing.
INDIANAPOLIS – He never fails. When customers checkout at a store, a clerk will offer a discount if they apply for the store’s credit card. But is it worth it?
With the holiday shopping here, people will likely be looking for ways to save a few bucks. So 20% off in exchange for a quick credit card application may not seem so bad.
However, before signing, it’s important to know what the fine print says.
First, the interest rate.
Store credit cards generally have a higher APR interest rate than regular credit cards. This means that it is more expensive to borrow money if you don’t pay in full.
13News did some research and the highest APR we found was 29.99% – and on maps like this there was no range. The 29.99% was what everyone was offered, regardless of credit quality. For those with a balance, that’s a huge interest rate to follow on cards like Big Lots, Discount Tires, Guitar Center, Kay, Zales, and a few other brands.
If it’s an introductory rate of 0% …
Be sure to search for the term “deferred interest”. If you don’t pay the balance before the allotted time is up, the company may charge you interest on any interest that has accrued. This can be really very important, especially on a large purchase.
Finally, ask yourself, “What else does the card offer?” “
Some companies may only offer rewards for their store while others, like Amazon, give customers a percentage on things like gasoline.
What to do if you need time to pay off large purchases
If you need time to pay off big purchases like an engagement ring or tires, explore the buy now, pay later programs.
Some of these programs include Affirm, Afterpay, or Klarna.
These programs allow customers to choose a payment plan with a fixed interest rate, and depending on their credit, this could be much less than store financing.
These services tell customers what their payment is, their interest rate and how much that means in dollars.
Remember that overspending leads to debt, and debt makes it even more expensive to borrow money in the future.