During a recession, most consumers are more interested in bargains, and shopping cards are one way savvy shoppers can earn discounts and be rewarded for their loyalty. Shopping cards are simply a way of banks and merchandisers to form productive partnerships. In the post recession scenario, these cards are also becoming a boon for people with bad credit scores. Here are a couple of uses for these lifesavers.
1. Improve Credit Score
The way your credit score is calculated, it does not only depend on the amount of debt you have, but also on how much available credit you have. In normal circumstances, the ideal way to improve the credit score would be to reduce the amount of debt as compared to the credit. However, in recent times, this has become a challenging task to accomplish. Another method is to go to a financial institution and request a card with a high credit limit, which is also not possible given the bad credit score and employment situations.
In such a case, shopping cards offer a cost effective way of improving the credit score while taking advantage of lower fees and numerous discounts at the same time. By purchasing a small value product and utilizing a high value credit line at the same time, you can increase your credit score dramatically.
The trick here is to choose a card that offers the best charges structure and communicates with the Credit Bureau as well. The whole mechanism of using a shopping card rests on the idea that the merchandiser will communicate the high credit line to the credit bureau.
2. Manage your Finances
Many of the shopping cards do not require credit checks, and most offer unsecured lines of credit. The limits are usually lower than normal credit cards but the servicing is also lower. Shopping cards are available even with a bad credit score and without any need to prove employment. For people recovering or still in a stint of unemployment these cards can provide an easy and cost effective way of managing finances without sinking into a debt trap.
Shopping cards do not function like not usual credit cards as these are not issued by Banks or financial institutions; rather these cards are a result of merchandiser partnerships. Due to this, these cards do not need to charge exorbitant fees. Their source of revenue is from the sales of actual goods and not the credit line itself.
3. Lower your Credit Service Costs
Most of these cards offer a revolving line of credit after an initial payment unlike regular credit cards which charge monthly or yearly for the same line. This line of credit functions in the same way as a normal card except for the fact that many such cards offer the facility of splitting initial purchases into installments which can be managed more easily.
There are no hidden fees or finance charges for such cards because of their classification as subprime instruments. The only payments required are the application fees and a payment for initiating the line of credit.
4. Purchase Quality Merchandise
Most of the shopping cards are affiliated with quality merchandisers that offer significant discounts and offers to members. Many of the shopping cards in the market are packed with free vouchers upon signing up for the cards. For people who are struggling with the recession or just recovered from it, this offers an attractive opportunity to lower their monthly expenses at no extra costs.
The only disadvantage of Shopping cards in this regard is that they are only valid for the particular vendor that has issued the card. Therefore it only makes sense to get a shopping card from a vendor which actually sells the merchandise you would like to purchase. Shopping cards are classified as subprime cards, which affect the way they can be used. For example these cards cannot be used at any outlet or vendor; these are valid at selected merchandisers only.
5. Online Card Account Access
All of the shopping card issuers offer a facility to view and check account balances online. This can prove extremely useful when trying to improve a bad credit score. This facility can also be used when you need to closely monitor and control your daily expenditure.
All in all shopping cards offer an innovative and cost effective solution to savvy consumers looking to rebuild their credit scores and improve the management of their finances at the same time. The only thing to take care is to thoroughly check the merchandiser and TOCs.
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