This holiday season, retailers may nudge you a little harder to
sign up for their store credit cards. Perks could include discounts
of 10% or more on your first purchase and introductory offers that
allow you to delay payments, interest or both.
The Cons of Retail Credit Cards
But be careful. Applying for several cards to take advantage of
sign-up discounts may ding your credit score. And interest rates
often run 20% or more -- bad news if you roll over a balance. But
if you pay off your balance monthly, these no-annual-fee cards
offer significant savings.
Customers who sign up for the
(annual percentage rate, 22.9%) get a 5% discount on purchases in
stores and at Target.com, plus free shipping with no minimum
purchase amount. Purchases you make with a
card (21.9%) qualify for periodic discounts of 15% to 30%.
Store-branded cards that bear the American Express, MasterCard
and Visa logos may be used everywhere those cards are accepted, and
not just at the stores with which they're affiliated. For example,
(13.24% for the Signature card; 18.24% or 21.24% for the Platinum
card) offers three points per dollar spent at Amazon.com; two
points at drugstores, gas stations and restaurants; and one point
on other purchases. The
True Earnings Card from Costco and American
(no annual fee with Costco membership; 0% for six months, then
15.24%) pays 3% back on gas purchases up to $4,000 per year (1%
thereafter), 2% on dining and eligible travel, and 1% on other
This article first appeared in Kiplinger's Personal Finance
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. It might be the best investment you ever make.