Now that the economy has made significant strides over the last year and a half and millions of consumers are once again feeling good about their personal finances, many might feel they are in a position to begin dealing with credit carddebt once again.
As a result of this new trend, many major national retailers are now choosing to increase the values of their offers to consumers for store-branded credit cards, according to Consumer Reports Money Adviser. In the past, the most valuable perks store-brand credit cards offered to borrowers was the ability to receive a discount of 20 or 30 percent on checkout, but only for the day they signed up. But now, many major store chains are choosing to offer perks such as a 0 percent introductory rate for the first several months the account is open, cash back rewards, ongoing discounts for all purchases made at the store, and other incentives.
The benefit of store-branded cards is that in most cases, they carry the logo of a major card issuer such as Visa, MasterCard or American Express, meaning that they can be used to make purchases elsewhere as well, the report said. This can be extremely beneficial when it comes to earning cash back for purchases at other locations, not just the store that issued the account.
Perhaps the most generous of these accounts is Costco's American Express card, the report said. It offers a 0 percent interest rate on purchases for the first six months the account is open, and it only increases to 15.24 percent after that, well below the interest rates offered on other major retailers' offerings. Further, it also grants 3 percent cash back on fuel purchases up to $3,000 per year – and 1 percent after that – plus 2 percent cash back on travel, and 1 percent on all other purchases.
But because these are retailer-issued cards, it's even more important to read the fine print on an agreement, the report said. For instance, the Walmart card says that it offers 1 percent cash back, but that's only after giving just 0.25 percent cash back for the first $1,500 worth of purchases, and 0.5 percent after reaching $3,000 in spending in a given year.
Consumers with retailer-issued cards will have to be aware that they usually come with high interest rates, which may result in their having to seek out debt relief.