Are Retail Credit Cards Worth It?
Many cashiers ask if you have a retail credit card every time you get to make payments at the checkout. If you always say no, you could be losing potential benefits. A retail credit card earns you discounts at your favorite retailer and often comes with additional perks if you shop there frequently. But before deciding to apply for one, we'll be glad to answer your question, "is a retail credit card helpful?". Read on!
What Is a Retail Credit Card?
A retail credit card is a type of credit card designed specifically for use at specific retailers. It is like a debit card, except that it must be paid off in full each month because there is no overdraft protection. Banks typically issue these cards, although some retailers may issue their own cards. These cards often offer rewards programs, low-interest rates, and other benefits that can make shopping at certain retailers more attractive.
When to Consider a Retail Credit Card
Retail cards, when used responsibly, can help build your credit. Unlike the general-purpose credit cards, they have less stringent underwriting, making approval quicker. They might be a reasonable consideration if:
You frequently shop at the retailer and want to snag the card's rewards or cardholders' benefits
You are looking for the cardholders' preview sales
You can repay the entire balance each month
You want to enjoy the benefits of an interest-free repayment duration
You can maintain low balances
You understand the retail credit card terms
Advantages of Retail Credit Cards
Retail credit cards offer several advantages, which include:
No annual fee: Most retail credit cards have no annual fee and therefore don't cost anything to maintain your account in good standing with the issuer.
Earn discounts/rewards: Many retailers love promoting their credit cards to save money. Some may provide huge discounts on your initial purchase and double your reward points from shopping at specific stores.
Membership perks: Most retail credit cards provide membership benefits besides the general in-store discounts. Cardholders may benefit from a prolonged return, free shipping, the ability to return goods without receipts, being part of the members-only events, and having access to different financing options and installment plans.
Helps you build credit: Like other credit card accounts, a retail card helps grow your credit over time if used responsibly.
Disadvantages of Retail Cards
Low credit limit: Retail credit cards aren't the best if you need a higher credit limit. Retail credit cards usually have lower credit limits compared to other credit cards. Carrying a balance can affect your credit score negatively.
Limited use: Retail cards reward loyalty but can only be used at that specific retail shop or chain of retail stores.
Is a Retail Credit Card Helpful?
Definitely. A retail credit card has several benefits, but it's best not to rely on them solely. Retail cards are suitable for people who frequently shop at specific stores because they can earn rewards points quickly and easily without paying extra fees.
Retail cards, on the other hand, aren't a great option every day because they limit you to a single retail shop or chain. However, if you can clear the entire balance monthly, a retail card may be the best option.
It is vital to have another co-branded or general-purpose credit card for other expenses and take advantage of credit card benefits like warranty coverage, fraud protection, purchase protection, and low foreign transaction fees.
Bottom Line
If you already have a retail credit card, it will help to use it responsibly and pay your balances on time. A general-purpose credit card besides your retail credit card is essential to diversifying your credit portfolio. It also helps improve your credit score.
To learn more, reach out to National FCG for better credit.