Reduce Your Retail Credit Card Spending

Retail credit cards can be tempting. Whatever the reason for getting a retail credit card, now you’re in deep, and simultaneously, the interest rates on these cards have soared. So, how do you regain your footing? Here are a few suggestions. 

Prioritize Repayment

When we look at paying off any debt:

• We get the biggest bang for the buck by paying off the debt with the highest interest rate.
• For that reason alone, store credit card repayment should rank at or near the top of your debt stack.
• Make smaller (even minimum) payments on the rest of your debts until these cards are paid off.

Understand Special Offers

If you’re making a large purchase, you may have been offered special financing that charges you no interest for a set period – sometimes 6 months or more.

• Special financing deals can be great if you use that time to pay off the purchase in full.
• But if you don’t pay it off 100%, you may be charged deferred interest – in other words, interest on the total purchase, when that teaser period ends.
• Read the fine print carefully and know what you’re signing up for.

Unsubscribe From Promotions

Your favorite stores will send you alerts about special sales and promotions via email and text. This is an attempt to draw you in with limited-time offers, and it can be hard to resist in the moment.

• Be proactive.
• Resist in advance by unsubscribing from emails.
• Type STOP to put an end to promotional texts.

Shop Then Payoff Habit

Perhaps there are a few stores where you’ve decided a retail card is worth it because you value the points, rewards, and access to sales.

• Use these cards consciously.
• Determine a spending limit in advance.
• Pay off the charges immediately.

Close the Card

In general, closing credit cards (particularly those you’ve had a long time and that have large credit limits) is not good for your credit score. But store cards’ credit limits are typically low, so any damage is likely to be minimal.

• If you know having these cards is bad for your financial health, cancel.
• Just don’t do it in the six months before you apply for a mortgage or auto loan.