Q. I've always heard it's best to charge store purchases with major credit cards instead of store cards. What's your advice? -- Sammy Shopper
A. Dear Mr. Shopper: With the exception of a couple of store cards, I normally charge via a major credit card. This manner prevents lots of 16 percent interests when using different store cards. However, one does enjoy some rewards by using the latter. Let's talk about which ones and the risks associated with them, according to Consumer Report's Shop Smart.
Certain retailer-branded store cards now offer the same perks as the big boys. For example, Costco and American Express are now branding buddies. I earn points by charging my Costco purchases with my AMEX, as well as other "regular" buys with the card. Be very careful, though, about the store debit cards that link to your checking account. If a person often overdraws his or her bank account and relies on the bank's overdraft protection, a grim situation could easily occur. Not only will one pay an overdraft fee (normally $35 each), but also he'll owe a fee to the retailer. Let's say you use your Target-branded debit card and experience an overdraft; fees begin to mount up. Target's fees run between $20 and $40, plus the $35 you owe the bank. Not a good situation at all.
Lower interest rates are tempting, aren't they? Some stores now offer these lower rates to their better-than-most customers. Cabela's, for example, the outdoor retailer, only charges 9.99 percent on store purchases. Barnes and Noble and LL Bean charge less than 14 percent on their purchases. If you're not a "good" customer, though, your interest rate could exceed 20 percent for many stores.
And then there are the cards that finance large purchases only and issued by home-improvements and electronics stores. Take into consideration, for instance, the Amazon card: it stretches up to twenty-four months of interest-free payments on certain items, including High Def televisions. Others such as Best Buy, Home Depot and Lowe's offer from six months to a year of zero percent financing.
Ellen Phillips is a retired English teacher who has written two consumer-oriented books. Her Consumer Watch column appears every Saturday. Email her at consumer watch@timesfree press.com.