Beware of Store Branded Credit Cards
Store banded credit cards have been around for many years, even as long as the typical visa or master card credit card. Many big box stores have store branded credit cards like The Home Depot, Lowes, Best Buy, and other big box retailers. This strategy of issuing credit does a few things for the issuing company: It helps increase sales as well as brand image, along with other features. Many big box retailers will run specials such "make no payments for a year" which are geared to increase sales. And this is where people come into trouble.
These store branded credit card specials like "make no payments for a year" or "pay no interest for a year" can be very appealing, which is what the specials are engineered to do. But what most people don't know is that there is a catch 22. Keep in mind the old saying of there is nothing such as a free lunch. Businesses are in it to make money, and they will do it in any fashion possible to please the growth and earnings expectations of their investors. So what is it that people don't know about these special offers? The no interest or no payments for a year has a catch.
If you read the disclosures regarding the special offer carefully, you will find that if you do not pay off the entire balance of the purchase made during the special promotion before then end of the promotional period (most are 1 year), you will be charged the accrued interest over the course of the promotional period. In other words for the period that the promotion advertises that payments are not due, unless you pay off the entire balance of the charge before the end of the promotion, you will be charged interest for that specific period. Retailers will not tell you this unless you either find an informed sales person and ask them or you somehow come into contact with an extremely informed and honest sales associate; these are hard to come by.
So what can you do? You can still take advantage of these special offers, however, you will have to be aware of the terms and conditions that surround the offer. Most of these offers will have a condition stating that if the balance owed is paid off before the end of the promotional period, then accrued interest will not be charged; this is where you basically get free money. However, offers do vary and you must pay attention to the details. Be an informed consumer and ask questions.
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