Why Arizona Consumers should Avoid Building Debt with Store-Branded Credit Cards

Because of higher interest rates, using store branded credit cards can be tricky.

Brick and mortar retailers are scrambling to stay afloat, but one of their tactics is just plain bad for consumers. It appears that many retailers are relying more and more on profits generated from store-branded credit cards. In fact, it’s difficult to go through any check-out line in an Arizona mall without being presented with the “opportunity to save money” by signing up for new plastic. The problem is that most store-branded credit cards come with up to 30% interest rates. This means that unless you’re able to pay off your balances every month, interest charges on store-branded credit card purchases will quickly eat into any savings that you’ve received. For this reason and others, Arizona consumers should fight the temptation to sign up for credit cards offered by retailers.

How Signing Up for Store-Branded Credit Cards can Spell Trouble for Arizona Shoppers

It’s understandable that retailers with a brick and mortar presence are cashing in where they can. With many consumers turning to e-commerce, it’s getting harder and harder to bring people into stores to make purchases. Department stores like Macy’s that have been mall staples for decades. However they are losing money left and right these days while Amazon continues to grow and thrive.

In 2016, Macy’s saw a $1.9 billion profit, with 39% of this profit coming from branded credit card earnings. This store is making money off the interest charges that their customer’s are paying on the debts they’ve accumulated. Plenty of other stores in Georgia are offering branded credit cards and banking on the fact that most of their shoppers will carry balances over from month to month.

Not only can store-branded credit cards lead Arizona consumers to paying more than necessary for purchases, but they can also lead to excessively high credit card balances. Even if bills are paid on time each and every month, using more than 30% of your credit card spending limits can hurt your credit score. This is because your utilization ratio will be too high and cause future lenders to suspect that you’re relying too much on credit.

Out-of-control credit card debt can also damage your credit score if you get to the point where you can no longer keep up with your payments. Late payments count against you when your credit score is calculated, and charged-off accounts can absolutely destroy your credit. It’s always best if Arizona credit card holders keep their balances low and only charge what they can afford.

Finally, if you apply for a store-branded credit card and get declined, your credit score will temporarily drop. Every time you apply for a loan or new line of credit, a hard inquiry is placed on your credit report. This causes your credit score to fall, but if you’re already dealing with less than perfect credit, every point counts. If you’re trying to rebuild credit with a credit card, a secured credit card is a safer option. There are also unsecured cards available for consumers with bad credit. They come with lower interest rates than most store-branded credit cards.

Another Way for Arizona Consumers to Improve Low Credit Scores

If you’re like a lot of Arizona residents, you’re looking for ways to rebuild damaged credit. One often overlooked credit repair method involves looking over your credit reports, finding errors and having these errors removed. Believe it or not, about 80% of consumer credit reports contain inaccuracies of some type. Because you are protected by a federal statute called the Fair Credit Reporting Act (FCRA), the credit bureaus are obligated to remove any mistakes that are discovered on credit reports.

Cleaning up your credit reports is one of the fastest ways to improve your credit score, and Arizona consumers can get a FREE credit repair lawyer to help them through the entire process.

How Arizonians can Get a Free Credit Repair Lawyer

Don’t let errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in settled cases. This is why our clients pay nothing for the work we do.

Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at 480-771-6001 or contact us on our contact page.   You can also visit https://youtu.be/HzPeLWJaUPc for a short video about our firm.