Do you love to go shopping? Are you gung-ho about catching up on the latest trends in the market?
If so, having a shopping credit card is necessary for you. A credit card is not only necessary for those needing money. Credit cards for shopping have several perks and benefits. Borrowers can receive numerous rewards and bonus points on every purchase, including cashback and other attractive offers.
This article is a good read for those who need a credit card to get started. Let’s look at what everyone must know before applying for a shopping credit card this year!
Types of Shopping Credit Cards
1. Store Credit Cards: These cards are a great choice for frequent shoppers at a specific retailer, as they often have exclusive discounts, free shipping, and other perks.
2. Co-branded Credit Cards: These cards have rewards. They benefit users at the partnering retailer and for all other purchases made with the card. They can be a good choice for people who regularly shop at a specific retailer and want to earn rewards for spending.
3. General Rewards Credit Cards: These are a good choice for people who want flexibility in their rewards and need to shop at a specific retailer more often to justify a store or co-branded credit card.
Factors to Consider Before Applying
1. Credit Score and Credit History: Your payment streak and creditworthiness will substantially determine which cards you qualify for and the interest rates and fees charged. Before applying for a card, ensure your credit score is in good shape, and your credit history is error-free.
2. Annual Fees and Interest Rates: Make sure to factor in all the charges when comparing different credit card options. Additionally, pay attention to the interest rates on the card. These can quickly add up if you carry a balance.
3. Rewards and Benefits: Different brands and types of cards give different rewards and benefits. Some may offer cash back on purchases, while others may give redeemable points for gift cards, travel, or merchandise. Pay attention to the rewards provided by each card and decide which ones best suit your needs.
4. Shopping Habits and Spending Limits: Consider your shopping habits and spending limits before choosing a card. A store or co-branded credit card may be the best option if you frequently shop at a specific retailer. A general rewards credit card may be a better fit if you want more flexibility in your rewards and spending.
5. Customer Service and Support: Finally, consider the customer service and support the credit card issuer offers. Look for a card with a good reputation for customer service, as this can be important if you run into issues with your card or account. You can also check out the credit card reviews by existing customers to ensure you choose the best one.
Pros and Cons of Shopping Credit Cards
Advantages of Shopping Credit Cards
1. Discounts and Rewards: Companies can provide discounts and rewards to customers using them to make purchases. These rewards can range from cashback on purchases to redeemable points for merchandise, travel, or other rewards. Store-branded cards may offer exclusive discounts and promotions to cardholders.
2. Building Credit: Consistently making on-time payments and keeping a low balance will show you in a good light in front of lenders as a responsible borrower, putting you in good stead for future loans and credit.
3. Financing Options: Some banks and credit card companies offer 0% interest on purchases for a certain period, which is highly useful if you need to make a large purchase and want to spread out the payments over several months.
4. Convenient and Easy to Use: These credit cards are accepted at many retailers and used for online and in-person purchases. They are easy to use and often come with mobile apps that allow you to monitor your account and make payments.
Disadvantages of Shopping Credit Cards
1. High-Interest Rates: These cards typically come with high-interest rates. If you carry a balance from month to month, you can pay a lot in interest charges, which can offset any rewards or discounts you earn.
2. Fees: Banks and card companies may charge annual fees, late payment fees, and other charges. These fees can add up quickly and reduce the value of any rewards or discounts you receive.
3. The Temptation to Overspend: A shopping card can make it easy to go beyond budget, especially if given a high credit limit. The flip side is debt and financial problems if you cannot pay off your balance in full each month.
4. Limited Rewards: Some credit cards for shopping may provide rewards or discounts restricted to specific stores or brands, limiting your options to redeeming rewards and may not be as valuable as a general rewards credit card.
How Does One Apply for a Shopping Credit Card?
1. Weigh-in Your Options: You can use online comparison tools or visit individual bank websites to compare interest rates, rewards, annual fees, and other features. It is also crucial to read the fine print to ensure no hidden fees or charges are associated with the card.
2. Documents and Details: Compile all the documents required, along with any personal information and statements of finances that a bank may need.
3. Online Application: Applying online is generally faster and more convenient, but applying in person can be helpful if you have any questions or concerns about the application process. Fill out the application form accurately and ensure all the information you provide is correct.
4. Application Approval and Card Dispatch: The process usually takes a few days, and the bank or retailer will contact you via email or phone to let you know the status of your application. Once your application is approved, you must activate your card by following the instructions provided by the bank or retailer.
Best Practices for Using a Shopping Credit Card
1. Don’t breach your financial comfort zone: Only spend what you can afford to pay back. Avoid overspending. Create a budget for your shopping expenses and ensure you stay within budget to avoid accumulating debt.
2. Resolve card bills on time: Late payments can result in high fees, penalty interest rates, and negative impacts on your credit score. To avoid these consequences, set up automatic payments or reminders to ensure you pay your bill on time every month.
3. Take advantage of all rewards, offers, and benefits: To make the most of these rewards, keep track of them and ensure that you use them before they expire. Check your rewards balance and redeem rewards as soon as possible.
4. Be responsible: Avoid using your card to make unnecessary purchases or buy items you cannot afford. Only use your card when it makes financial sense and is a necessary expense.
5. Check the card statements often: Immediately report errors or discrepancies to your bank or retailer. Reviewing your statements can also help you keep track of your spending and ensure that you stay within your budget.
That’s everything you need to know about shopping credit cards, compiled into a short read! We hope you find everything you need and can now apply for a card that works for you!