Store credit cards, like the Lowes Credit Card, can get a bad rap, but they can actually be good if used wisely. Credit cards can be a secure and convenient method of payment that offers valuable rewards. 21 percent of Americans have opened a store credit card at least once over the past two years for the immediate in-store discount.
Your credit cards are not a license to keep spending money you don’t have. Don’t be tempted to spend more than you can afford. Keep an eye on your credit utilization rate too. This is the percentage of a consumer’s available credit that he or she has used. In general, the higher your credit utilization rate, the higher credit card debt you have, and the lower your credit score will be.
Typically, a credit utilization rate of approximately 25 percent is a good guideline. FICO credit-scoring formulas assume that consumers who use more of their available credit are riskier borrowers than those who use less of their available credit.
Here are three of the best ways to use your Lowes credit card.
1. As a Method of Payment
Save your cash! When you pay your Lowes statement balance in full and on time, you will avoid interest charges. When used in this way, the credit card becomes simply a method of payment, not a means of finance. That allows you to enjoy a short but useful grace period. For example, customers receive what amounts to a free 30 day loan when you make purchases that are paid off 25 to 55 days later when you get your bill in the mail.
2. To Earn Rewards for Spending
Lowes Credit Card holders get 5% off purchases everyday. It’s cash back for purchases you would have made anyway. You get 5% cash back on Lowes purchases but only if you don’t use the “special financing”. If you opt for a financing offer, like no payments for 6 months on single-receipt purchases of $299, then you won’t get the 5% rebate.
It’s one or the other, but not both. And you cant use it along with any coupon or discounts. Basically, its anything at regular price. But its still a good deal, if you pay your balance off each month! Now, 5% may not sound like a lot, but some cardholders earn hundreds of dollars in cash-back type rewards each year.
3. To Build Credit
Any credit card can be extremely helpful in building a good credit history so you can qualify for better rates on big purchases down the road like a car or a house. Typically store cards have much lower credit score requirements, so if your credit score is low or non existent, then the Lowes card offer may be a good way to go.
An even better way to build credit is with a secured credit card. Bank of America offers a secured credit card with a $300 limit. Remember, credit cards can help you build your credit, not repair it! Avoid all of those credit repair schemes! They do not work.
When used appropriately, a store credit card can get you discounts on items you buy regularly and help you establish good credit habits that will benefit your personal finances.
Don’t get tempted to just swipe the card at the register and forget about how much money you just spent.
Making on-time payments with all of your creditors and keeping account balances low are key to building a valuable credit history.
By Victoria Stone