When you are doing your back to school shopping, here’s a tip:
Don’t sign-up or use department store credit cards. Often stores offer promotions for extra reward points and discounts if you use their credit cards. However, this is often a bad idea, unless you pay off the balance in full before they make their interest charges.
Department store credit cards often have high interest rates, which can be as high as 30%.
Others sometimes offer the ability to use their credit card and get ‘free interest’ with no payments for up to a year. Here’s the catch. If you are late making the full payment against this credit card by even ONE day, you will pay interest from the first date of purchase. That means you will be charged 30% for the full year, even though you were only one day late. Also, depending upon the size of your purchase the processing fee can amount to more than the interest on your regular credit card.
When in doubt, pay cash.
If you owe money on department store credit cards, read our article on how to eliminate credit card debt.