Monday, May 21, 2018
Business

That store credit card can prove costly

You've probably received the pitch at the checkout counter: "Would you like a 20 percent discount for opening a credit card with us?"

The offers can lead to savings for people who are store regulars and for consumers who diligently pay their balances off in full each month. But a survey by Creditcards.com of 61 major retail store credit cards found that stores are charging higher interest rates, making the offers less of a deal.

The study found that the average retail credit card charges an annual percentage rate of 23.23 percent, up more than 2 percentage points from 2010. Cards that can be used to make purchases at only one retailer had the highest rates, 24.48 percent, compared to 21.63 percent for store-branded cards that can be used at other merchants. Among the cards surveyed, Zales had the highest rate, with an APR up to 28.99 percent.

"If you pay your bill off in full every month, it can work for you," says Matt Schulz, a senior industry analyst for Creditcards.com. "But if you slip up, if you miss a payment, if you carry over a balance, the numbers can turn against you fairly quickly."

Here are some other things to consider if you're thinking about getting a retail credit card:

Interest charges can undo any discounts: Most of the retailers surveyed enticed consumers to sign up by offering a low introductory rate or giving them a discount of up to 20 percent on their first purchase. But those who don't pay off their card balances immediately could see those discounts completely erased by high interest charges. As Creditcards.com points out, someone who puts $1,000 on a retail credit card that charges the average interest rate of 23.23 percent would need 73 months to pay off the balance if they make only the minimum payment. They would also end up paying a whopping $840 in interest fees.

Rewards are getting more complicated: Retailers are rolling out more creative perks for card users, such as free tailoring services and VIP shopping events, Schulz says. But the best rewards go to the biggest spenders. Some retailers, such as Macy's and Nordstrom, use tiered loyalty programs that offer greater discounts and benefits to customers who graduate to "preferred" or "elite" status for spending more. But some consumers who don't study the rules may not take advantage of the rewards, he says.

Opening a new credit card can ding your credit score: A consumer's credit score drops by a few points whenever they open a new line of credit, says Greg McBride, chief financial analyst for Bankrate.com. This is a minor consequence when compared to the high interest rate charged on purchases. But people who are planning to apply for an auto loan or a mortgage soon should avoid applying for new credit, McBride said.

It's easy to max the cards out: Many of the credit cards issued by retail stores come with low balance limits of about $500 or $700. That makes it easy to max those credit cards out or creep near the spending limits. Credit card balances should be less than 30 percent of the spending limit in order to avoid damaging a consumer's credit score, McBride says. Balances need to be below 10 percent of the spending limit in order to help a person's credit score.

Bottom line: Retail credit cards can help people rack up savings, but the moment you decide to carry over a balance, those benefits can easily get wiped out.

Comments
GasBuddy predicts plunge in summer travel, blames gas prices

GasBuddy predicts plunge in summer travel, blames gas prices

At least one gas price tracker expects rising fuel prices to sharply curtail summer travel. In a recent survey by GasBuddy.com, just 58 percent of motorists surveyed said they would take a road trip this summer, down 24 percent from last year. Just u...
Updated: 1 hour ago
Starbucks: You donít have to buy coffee to sit in our cafes or use our restrooms

Starbucks: You donít have to buy coffee to sit in our cafes or use our restrooms

Starbucks is now allowing people to use its restrooms and sit in its cafes and patios even if they do not buy anything.The coffee giant on Saturday announced its new policy, which says that customers, including those who did not make a purchase, can ...
Updated: 3 hours ago
Camping without the hassle: New service rents you all the gear you need, plus the car

Camping without the hassle: New service rents you all the gear you need, plus the car

One day in April, I returned from a camping trip - a quick 24 out of the city - and ran a load of laundry. Whatís more telling is what I didnít do.I didnít hose down a muddy tent, I didnít soak a shoddily cleaned pot, and I categorically did not empt...
Published: 05/19/18
Romano: Save your money, sports betting wonít be in Florida anytime soon

Romano: Save your money, sports betting wonít be in Florida anytime soon

It is the middle of the day and the beginning of the off-season at Tampa Bay Downs. That means the action is limited to simulcast wagering, and that means the televisions outnumber the bettors.The parimutuel industry is long past its heyday in Americ...
Published: 05/19/18
Son of Crabby Billís founder leaves complex legacy of troubled projects and good deeds

Son of Crabby Billís founder leaves complex legacy of troubled projects and good deeds

SOUTH PASADENA ó Like his father, who founded the Crabby Billís seafood restaurant chain, John Loder Sr. had a larger-than-life personality. That was one reason he dived into the real estate business, becoming a well-known, if at times controversial ...
Updated: 1 hour ago
Global Tampa Bay initiative seeks to grow direct foreign investment through expanded regional teamwork

Global Tampa Bay initiative seeks to grow direct foreign investment through expanded regional teamwork

TAMPA ó A decade ago, the Great Recession put Hillsborough and Pinellas countiesí efforts to grow their foreign exports on hold.But since then those efforts have returned, gained support and momentum, expanded the range of their ambition and are now ...
Updated: 6 hours ago
Florida unemployment holds at 3.9 percent, state adds 9,600 jobs

Florida unemployment holds at 3.9 percent, state adds 9,600 jobs

Floridaís economy appears to have plateaued with its unemployment rate holding at 3.9 percent for the seventh straight month, according to the April report released Friday.But some economists say it may be a good thing if the rate doesnít fall much m...
Published: 05/18/18
Lawsuit over Riverwalk Place tower in downtown Tampa settled

Lawsuit over Riverwalk Place tower in downtown Tampa settled

TAMPA ó A lawsuit over the mix of residences and offices in the planned $350 million Riverwalk Place tower has been dropped.Last August, Riverwalk Tower Investment-Intown LLC, which had been expected to be one of the developers in the project, filed ...
Published: 05/18/18
Orlandoís new attractions power jump in theme park attendance

Orlandoís new attractions power jump in theme park attendance

By MIKE SCHNEIDERORLANDO ó The arms race to build new theme park attractions in Orlando is paying dividends. A new report released this week shows theme park attendance at the largest parks in North America last year was up 2.3 percent, powered by ne...
Published: 05/18/18
How Mosaicís relocation could help Tampa International Airport land a flight to Brazil

How Mosaicís relocation could help Tampa International Airport land a flight to Brazil

Tampa International covets a nonstop flight to S„o Paulo, Brazil. Mosaic Co, which is moving its headquarters to Hillsborough County, has huge holdings in the country, including several mines. Could Mosaicís relocation help TIA realize its dream? It ...
Published: 05/18/18