If you have ever been encouraged to apply for a credit card at the checkout counter so that you can qualify for a discount on your purchase, you have been exposed to discount credit cards. This can include gas station branded credit cards, department store credit cards and rewards credit cards that can be used to get discounts at specific vendors. Other credit cards might give applicants lower intro interest rates or waive fees, but these should not be categorized as discount cards.
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You have to apply for credit cards that offer discounts just as you would for any other line of credit, while being subject to standard credit restrictions and approval criteria. In other words, you may not want to get a discount credit card at your favorite chain store if you already have too many credit cards. Consumers can be denied for discount credit cards, have their credit limits reduced or have their accounts closed by the creditor, so use your discount credit cards wisely.
Credit cards that are good at a dozen or more stores and purchased for a set amount do not qualify as discount credit cards. Some prepaid credit cards come with complimentary services and incentives, however, these card do not fall into line with standard discount credit cards.
Merchants Discount Credit Cards
Major department stores and retailers frequently offer store credit cards to shoppers in return for a flat discount on purchases. Also referred to as department store credit cards, these credit cards are different because you can only use them at a limited number of stores.
Regular credit cards can be used in any place that accepts credit card payments.
Grocery, hardware, home and garden and furniture stores are just a few examples of merchants that offer discount credit cards. Some credit cards come with no interest introductory periods where consumers need not make any payments for the first six months to a year. These types of credit cards can be very beneficial to shoppers looking to finance major purchases at the lowest price possible.
Discount Credit Card Options
Many retailers offer a standard discount credit card to all customers, but there are others that also have premium and starter credit cards options. You will be made aware of all of your options when you inquire about an application. Generally, consumers are not expected to maintain a revolving balance on discount credit cards. The bill should be kept low enough that you are able to make payments in full each month.
Initially, your discount credit card will likely come with a low credit limit. Forbes reports that requesting periodic credit line increases from your credit card issuer can drastically improve your credit scores quickly. You will only be granted a credit limit increase on your credit card if you can prove that a higher monthly bill would not affect your ability to pay.
Interest Rates and Terms on Discount Credit Cards
Discount credit cards are not usually associated with lower interest rates. Because many discount credit cardholders make a habit out of submitting their monthly payments in full prior to the due date, higher interest rates are not that important. If you intend on using your card only on occasion, you can simply put aside the full purchase amount and write a check to your issuer shortly after the charges post.
You may pay different amounts for late payments on your card, but the agreement will use standard credit card terminology. The Consumer Financial Protection Bureau has a list of frequently used credit card terms that can help you to understand your credit card agreement as well as the language used on your billing statements.
Take a close look at the amount of money you can save on future purchases by applying for a discount credit card, and then consider what you will pay in interest if you accumulate a large balance. Sometimes the savings offered on these cards are of little benefit to consumers with impaired finances.
If you know that you will be able to use your discount credit card responsibly, you can send off your application and use this line of credit to save a substantial amount of money.
Prepaid credit cards and gift cards are an alternative to consider when discount credit cards are deemed impractical.
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