Page 25 - ARUBA TODAY

BUSINESS Thursday 14 November 2019
A25

Ho, ho, no? Reconsidering store credit cards at the holidays

By SARAH SKIDMORE SELL carry a balance, it can be
Associated Press a big expense.
Most shoppers know the Also consider your credit
routine: It's time to check score. Too many inquiries
out and the cashier (or could lower your score
website) offers a discount slightly and too much debt
if you sign up for the store can drag it down. Addition-
credit card. ally, store cards typically
The offer can be hard to re- come with much lower
fuse, but experts say some credit limits than a normal
shoppers should do just card, which means if you
that. run up $400 on your store
Signups for retailer credit card with a $500 credit lim-
cards soar during the holi- it, you could be hurting the
days. But the cards' perks utilization rate that goes
don't always outweigh the into determining your score
downsides for everyone. as well.
Here's what to consider: These cards may also en-
HOW THEY WORK courage you to make pur-
Retailer credit cards work in chases you wouldn't other-
one of two ways. wise make, said Kit Yarrow a
Cards that can only be consumer psychologist and
used for purchases at author of the book "Decod-
that chain — like Target In this Aug. 11, 2019, file photo a woman holds a Macy's card in New Orleans. Signups for retailer ing the Consumer Mind."
or Macy's— are known as credit cards soar during the holidays. Having a store credit card
"closed-loop" cards. Associated Press might incite you to make a
"Open loop" cards, on the purchase there rather than
other hand, such as the dent of financial services, starting to build, or rebuild, pealing in the rush of holi- shop for the most competi-
Amazon Prime Rewards research and consulting at their credit. day shopping. tive price, she said. You also
Visa or the Capital One Transunion. The cards can save you sig- CONS open yourself up to more
Walmart Rewards card, Transunion has studied nificant money if you are The most notable down- marketing, which may in-
can be used anywhere but this issue for several years making a large purchase — side of store cards is interest duce you to buy more than
tend to earn better perks at and found that private la- say a refrigerator, mattress rates. you can afford.
the named retailer. bel card originations can or a particularly large haul The average interest rate Consumers predominantly
Holidays are when Ameri- double during the holiday of goods. The discount and on a retail card is about 26 sign up for these cards on
cans tend to shop the most, period. For department loyalty perks can also be a percent, compared with impulse, but their financial
so it's no surprise that sign- stores and clothing stores good thing if it's a store you 21 percent for a traditional impact is long lasting.
ups for credit cards jump at alone last year, originations already shop at regularly. credit card, according to Yarrow urges shoppers to
the end of the year. were 65% higher during the Other benefits vary by Ted Rossman, industry ana- stop and consider if they
Credit reporting agency two-month holiday season card, and include free lyst at Creditcards.com. just want the discount ver-
Transunion says that credit compared with the rest of shipping, early access to That's just the midpoint of sus really needing another
card originations jump in the year. sales or more generous re- the range based on credit credit card. And that can
November and Decem- PROS turn policies. Nordstrom, for worthiness, Rossman warns. be hard to do during the
ber for both general and There are some perks to re- example, offers its loyalty Some branded cards eas- holiday rush.
private label cards. But tailer cards. members and cardholders ily run into the 30 percent "There's a two-month pe-
those associated retailers A closed-loop card is easier curbside pickup for pur- range. riod of time where rational
tend to be more sensitive to acquire than a tradition- chases and free alterations. That's no big deal if you pay people become a little in-
to the holiday surge, said al credit card. That's good There's also a quick ap- your card off in full each sane and it's during holiday
Matthew Komos, vice presi- news for folks who are just proval process, which is ap- month, but for people that shopping," she said.q