Getting into retail credit is worth knowing and understanding why obtaining it is so easy -- and there's an underlying viscious cycle attached to retail credit becomes problematic. Handling retail credit entails careful study even before getting into borrowing in the first place. Household finance is an alluring business. Big one. So is impulse buying. So is advertising. They are a co-dependent cycle--often one part loses ending up paying more than the displayed original retail price. Advertising promotions appeal to the senses, "My life would be so much better if I get that component!" Before you knew it, that big box at your doorstep becomes your repayments nightmare. Retail loans are marketed mainly through shops and department stores. Understand what you are signing in for. Ask questions. Bear in mind that home situations may change in which finances must be taken in careful thought before committing yourself to finance plans or contracts. OR : Save money for that appliance or computer unit. Savings alloted for any big purchase, because you need it, is the only safest and best practice you can employ for a happier debt-free lifestyle.
I don't understand why anyone would put a charge on their credit card they weren't sure they could pay at the end of the month unless it was something like a medical emergency where you could die of face permanent injury if you don't accept the charge. You seriously don't need most big ticket items anyway. Most of them have decreased my quality of life even when they were gifts, so I got rid of them.
Well in some cases, people have emergencies where major appliances fail and they don't have the extra money on hand to pay for it in cash. Consider if something like your refrigerator died on you - you don't really have the luxury of waiting around until you can save up for a new one, not to mention all the food you potentially stand to lose if it all goes bad before you get a new fridge put in. Similarly, something like a stove or a washer/dryer needing to be replaced immediately may require a person to have to put it on a credit card and pay it off incrementally instead. Plus you know when something goes wrong, it's often "when it rains, it pours" and several more things go wrong at the same time - hitting you with a bunch of unexpected expenses at once. Some of these stored credit cards may offer free financing for several months to a year, which can help out in such circumstances. But it's important to pay them off within that window of time, because beyond that their interest rates are often way too high. I personally haven't had a store credit card in over a decade, I got rid of all of mine because it was too much of a hassle paying separate bills for each every month, not to mention the cards were useless at any other places beyond the store they were from. Too much hassle imo.
I don't do the whole credit card thing for individual stores. I have one major credit card, that's it. I'm a very disciplined spender. I definitely don't want to get myself into financial trouble due to making impulse buys at department stores. That's a recipe for disaster. I'm sure a lot of folks who aren't very smart financially do great harm to their credit ratings because of the easy availability of these cards.
Store credit is a necessary evil. Not everyone can go without a big ticket appliance for a prolonged amount of time whilst they save for a replacement. For example, it would probably take me around three months to save the money needed for a new cooker if mine was to break down. There's no way I could go without a cooker for three months so I'd have no option but to use a credit card or take out store credit. Not everyone has the luxury of being able to save for a rainy day and it's a sad fact of life that sometimes, a little debt is unavoidable.
I think that, as long as you do your best to manage the debt that you get into, you could be okay with small amounts of credit on things like store cards. But you have to make sure that you're getting a good deal, and obviously that you really do need the items that you're buying - otherwise the stress of the debt wouldn't ever be worth it for you. I don't have any store cards, though I do have a credit card - because I gain reward points whenever I spend on it, so I do all of my spending on that and I will then pay it off as soon as I get home so that I never have to pay any interest on it. That is the way to beat them at their own game, and is something that you can definitely do if you're careful with your own spending.
I have never used a store credit, I find my banks credit is easier and cheaper and I have had it a long time so it's better on my credit. Is there any crazy good store credit deals that would make it worth it? I don't typically advocate taking on debt for small purchases @missbishi it can be necessary we have all been there but it should be avoided.
Not everyone can afford to pay for a large appliance in cash. I think these people are in the minority. Store credit makes it easy for one to purchase an appliance they need when they need the item, and then pay for it in small increments until the full amount is paid off. That's the way we have always done it with large appliances. The only drawback here is the amount of interest that accumulates overtime with this method of purchase. Although it is an affordable way to pay for these large appliances, we end up paying more than the actual price of the item in the long run. But for a great majority of people, this cannot be avoided. Depending on the price of the item, one has to decide if one can afford to pay for it one time or if they have to do it in installments.
This is just one area where you need to make sure that you pay things off on time. I am not sure, but I think that the rates are higher and that these have more damaging effects on your credit score than other types of loans that you might take out. I would just be extra extra careful here.
