When a person is just starting to establish a credit history they are often advised to get retail store credit cards. These credit cards are not backed by a major credit card company, but do still report to the major credit bureaus. Retail store credit cards are issued by a retail store and can only be used for that particular retail store. There are many benefits to this type of card.
First of all, retail store credit cards are easier to get than other credit cards. The balances are usually rather low, so if a person defaults the retail store can usually obtain their money easily without a huge loss. They work somewhat like a traditional credit card, but can only be used as the issuing retailers locations. A person charges their purchases to the card and then is given a grace period to pay the balance.
If the balance is not paid the person is charged interest. One of the reasons retail store cards are easier to get than other credit cards is because the seller is guaranteed to get your business. The card can not be used elsewhere, so every time the cardholder uses it they are making money off of it. Additionally, it is a way for the retailer to make a little extra money off fees and interest charges.
Some of the perks of having a retail store credit card start coming the minute a person signs up. Many retail stores now offer a person a discount on purchases made the day they sign up for their card. This temptation offer not only only allows a person to save on their purchases, but also helps them keep their money in their pocket, at least for that day.
Many times the discount offer is also paired with a free gift, like an umbrella, cosmetics or other store merchandise. Holders of a retail store credit card may also get special notices about sales before the general public or even receive rewards for using their card.
Retail store credit cards are becoming very popular. Many people find them easy to get and the additional perks make them worthwhile. Retail store cards can also help a person budget their purchases and can come in handy for early bird sale specials. Retail store cards are a great way to build credit while also learning about how credit cards work because they do not allow a person to spend money anywhere except at the particular store, which can help curb overspending.