New York Congressman Anthony Weiner is taking a stand against department store credit cards. It has never been a secret that these department store cards charge a very high interest rate – even when compared to other credit cards – so it should come as no surprise that someone finally took notice. Weiner has done more than take notice, however. He is actually trying to change it.
In response to this issue, Weiner has introduced new legislation that would require stores to post their interest rates on their cash registers. This way, customers would be better informed before deciding to apply for the credit card.
I am not certain that posting the interest rates will really have much of an impact on whether or not consumers apply for these cards. Really, I believe most people are away that these cards have high interest rates. Those people that are not aware of the high rates probably are not very knowledgeable about credit cards in the first place and, as such, won’t really understand how the high interest rates affect them. Therefore, what is really needed is more education so consumers can make wise financial decisions.
Nonetheless, posting the interest rates is a good start, particularly since many of these cards offer great teaser rates of low interest or even 0.0% interest for a certain period of time.
“One of the most dangerous and pernicious things about the teaser rates is sometimes you’ll see no interest for six months, said Weiner. “But, if on that sixth month and one day, you have not fully paid it off, you pay the entire amount as if you’ve been paying interest all those days.”
That is the real trick when it comes to these store credit cards. You can take full advantage of these teaser rates and get some great deals if you play your cards right. For example, when redoing my kitchen, I placed all of our new appliances on a new Lowe’s credit card that gave me 0.0% interest for one year. If I would have failed to pay the card when that year was up, I would have had to pay several hundred dollars because the interest accrues and hits you all at once if you don’t pay it off. Since I paid it off, however, I didn’t pay a single penny in interest.
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