You’re holiday shopping at a big-box retailer. When it’s time to pay for your purchases, the sales person informs you of a great deal you can get if you open a store credit card, like 0% interest financing, competitive rewards rates, and a discount on your first purchase. Sounds tempting but think twice before you sign up for that credit card!
What you need to know before opening a new store account:
- Most store credit cards use deferred interest financing – meaning, during the no-interest period, you are accumulating interest on your purchases. So, unless you can pay off the balance before the introductory period runs out, you will be paying deferred interest charges.
- Store credit cards tend to have higher APR than a general use credit card.
Bottom line, if you open store accounts for holiday shopping, chances are you’re accumulating more debt than you can afford. So, this holiday season, be mindful of your budget and think twice before opening a store account for a debt-free holiday!