When shopping for the best deals, many consumers may be enticed by the offers of a retailer who will give them 10 or 15 percent off their purchase just for signing up for and using a new store-branded credit card to make a purchase. But according to a report in the South Florida newspaper the Sun Sentinel, these new accounts could lead to more financial trouble, rather than less.
The report said that while it may seem like a deal to get a fairly sharp discount on that first purchase, many of these cards carry hidden interest rates that are considerably higher than those for traditional credit cards.
As a result, consumers should take on these credit card accounts with great caution. The newspaper advises that it will damage a person's credit score if they open too many of these accounts in a short period of time if they are to do so at all. In addition, it may save more money over time to simply use a credit card they already had that carries a lower interest rate.
It's also important for any consumer who enters into such an agreement to be aware of the credit card's issuer, the report said. While the card itself may carry the logo of a major retailer, it likely also bears the logo of the issuing company, such as American Express, Discover, MasterCard or Visa. These lenders will allow consumers to use branded cards at other businesses, but will typically do so at a higher interest rate than they do at the store from which the card came.
Often, these cards also carry other perks such as no interest for six months on any purchase made at the store that issued it. However, it is important for a consumer to carefully examine these agreements to see if there are any restrictions so that they don't fail to make a payment because of a misunderstanding.