"By opening a new account with us?" As tempting as it may sound, you may be better off pocketing that 10% and paying...for your privacy and your credit.
With the Christmas shopping season just around the corner, you'll start to see more sales signs in department stores and for general merchandise. Hoping to attract consumers with instant savings, many businesses are looking to have you as a long-term customer with credit accounts.
These accounts are perfectly legal, but here are some things to watch for: (1) find out the interest rate. Department store credit cards are usually higher than credit cards that you can obtain through your bank or credit union. (2) Find out the late penalty. Mail your payment just one day late and your interest rate could skyrocket into the double-digits. Once that additional finance charge is added, you'll be paying interest on the finance charge in addition to the other charges if you don't pay your balance in full each month. (3) Do the math. Are you really saving 10% if you open a charge account and don't pay it off every month? That 10% that you saved one day in the store, could end up costing you hundreds in finance charges.
Also, think about how much your privacy is worth. Not only will you have another open account on your credit report, but once you start to receive ‘special offers' in the mail, your name could be sold to many other mailing lists.
The goal is to get you to spend, and spend, and keep spending, until you start to owe everyone. Maintaining a watchful eye on your credit, and your debt is the best way to reduce inquiries, and help boost your credit score. Remember, it's not how much money you make, it's how much money you keep.
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