These days, millions of consumers are now in the market for new credit cards after dialing back spending habits during the recession, and one way many may be getting them is through major retailers.
In recent months, many consumers may have turned away from opening retailer-issued credit cards because these accounts typically have higher costs associated with them, such as interest rates elevated above the levels typically seen on traditional cards. But perhaps because of that consumer reluctance, many of the nation’s largest retailers are now sweetening the pot with increased perks on their store-branded cards, according to Consumer Reports Money Adviser. And because many store-branded cards also bear the logos of major card issuers like Visa, MasterCard and American Express, they can also be used in other retail locations to rack up rewards, not just at the store where they were obtained.
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Now, many are offering deals such as cash back, low introductory rates and special discounts, the report said. For instance, this includes 3 percent cash back when buying gasoline on the Costco-branded American Express, the report said. Similarly, the Walmart card offers cash back for all purchases in addition to a discount of 5 cents per gallon on all gas purchases at Walmart-owned pumps through the end of the year.
However, there are some drawbacks as well, and to find them all out, consumers will have to carefully read the fine print on the agreement when they sign up, the report said. For instance, these cards still carry higher interest rates than standard accounts issued by financial institutions, and in some cases, there are restrictions on the way consumers can earn their rewards. Though the Walmart card allows 1 percent cash back on all purchases, consumers will only receive 0.25 percent cash back for the first $1,500 they spend on the account, and 0.5 percent after they exceed $3,000 in purchases for any given year.
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For this reason, it can be extremely important for consumers to carefully take the time to review several credit card offers, both from specific retailers and traditional financial institutions. Doing so will allow them to find the card with all the features they’re looking for without costing them a lot of money in the long run.
Image: rolando.pujol, via Flickr