Credit Cards That May Not Be Benefiting You In Any Way
Having a good credit score is highly valuable. Generally, having credit cards and managing them responsibly has a positive effect on your credit score. However, there are certain types of credit cards that offer no real benefit beyond their ease of approval.
Department Store Credit Cards
Department stores use all kinds of incentives to get you to sign up for their credit cards. Usually, these involve discounted prices every time you use the card, exclusive offers to advanced sales, and other savings. However tempting this may be, the credit cards offered by department stores tend to have an incredibly high interest rate. Those few dollars of savings don’t seem so attractive when you’re paying them back through interest. Avoid opening department store credit cards if at all possible.
Credit Lines for Big Purchases
This is something we see all the time in furniture stores and large appliance stores. These types of items are expensive, so to drive sales, stores offer credit lines to help finance the purchase with little money down and low interest rates. However, these credit lines basically act as a maxed-out credit card within your credit score. This is hugely detrimental and a big step backwards for anyone looking to build credit. Use existing credit cards if possible to avoid losing points on your credit score.
Credit Cards with High Initial Fees
Credit card companies often try to sneak in fees to squeeze a little more cash out of you. Beware of credit cards with account set-up fees, participation fees, and fees for credit limit increases. Paddon & Yorke Inc., a company that provides Mississauga debt consolidations, warns that most of these will be written in the fine print of the credit agreement, so be sure to read thoroughly before signing.
Credit Cards that Don’t Report Credit Limits
You may think that the credit card company is doing you a favor by not reporting your credit limit to the credit bureaus. However, these bureaus are then allowed to assume that your credit limit is whatever amount you currently owe. Any work you have done to reduce your debt on this card will not show in the credit report requested by the major credit bureaus.
Rebuilding credit is an uphill battle, but avoiding these credit mistakes will get you back on the road to repayment. Beware these credit cards that are more hassle than they initially seem.
