Store Charge Card Tips
http://creditfederal.com/article/articles/558/1/Store-Charge-Card-Tips
By CreditFederal.com - A good or bad credit personal loan, auto and mortgage financing, and credit card resource.
Published on 08/16/2008
Store charge cards offer many benefits, including rewards and rebuilding or establishing credit. The terms and conditions; however, can make it hard to maximize credit card perks.
How and how not to use store charge cards
Don't get too many store charge cards. Store charge cards can help establish credit, but you should have no more than two store charge cards at any time. The less you have, the more likely you'll be able to focus on maximizing the rewards.
Keep balance less than 20% of the credit limit. Higher balances lower your credit score and are more difficult to pay off. On a charge card with a $500 credit limit, your balance should never go beyond $100.
Don't charge more than normal just to earn rewards. The temptation to earn cashback or a gift certificate will be great, but don't make purchases just to get them. You may actually save more than the reward just by keeping your purchases to a minimum, not paying interest or fees.
Make all payments on time. Not only are timely payments important for establishing a good credit history, you also avoid late fees and penalty interest rates.
Pay balances in full. Store cards have high interest rates that make carrying a balance costly. When you don't pay your balance in full, a finance charge is added to your balance. Each time you pay a finance charges, you lessen the benefits and rewards of these cards.
Don't make new charges unless last month's balances were paid in full. Get in the habit of paying off your store card in full each month. Or; as mentioned earlier, you could pay more than you earn in rewards, plus end up with debt that can take months or years to pay off.
Consider a standard, unsecured credit card that offers rewards. Store charge cards only offer rewards for certain purchases (usually only from their stores or partners), whereas regular credit cards offer rewards and benefits for a broader range of purchases and often lower interest rates, too.
Keep balance less than 20% of the credit limit. Higher balances lower your credit score and are more difficult to pay off. On a charge card with a $500 credit limit, your balance should never go beyond $100.
Don't charge more than normal just to earn rewards. The temptation to earn cashback or a gift certificate will be great, but don't make purchases just to get them. You may actually save more than the reward just by keeping your purchases to a minimum, not paying interest or fees.
Make all payments on time. Not only are timely payments important for establishing a good credit history, you also avoid late fees and penalty interest rates.
Pay balances in full. Store cards have high interest rates that make carrying a balance costly. When you don't pay your balance in full, a finance charge is added to your balance. Each time you pay a finance charges, you lessen the benefits and rewards of these cards.
Don't make new charges unless last month's balances were paid in full. Get in the habit of paying off your store card in full each month. Or; as mentioned earlier, you could pay more than you earn in rewards, plus end up with debt that can take months or years to pay off.
Consider a standard, unsecured credit card that offers rewards. Store charge cards only offer rewards for certain purchases (usually only from their stores or partners), whereas regular credit cards offer rewards and benefits for a broader range of purchases and often lower interest rates, too.