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| The Basics | Want a credit card with your purchase?
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"Many reward credit cards featured on our site -- from American Express, Discover Card, Citi and Chase -- offer 5% cash back on all grocery store, drugstore and gasoline purchases and 1% cash back on all other purchases," Woolsey noted. "And, these cards typically have a 0% introductory APR for 12 months and a reasonably low variable APR thereafter."
But the discounts, reward certificates, special financing deals and entre to special sales can make some cards worth the risks for some shoppers.
Take em up on it, but
If you're in the market for savings, here's how to choose and use the best deals:
Research your options. The whole point of the 10% discount offer is to induce you to make a snap decision. But smart consumers check out the deals long before they approach the checkout counter. You'll want to know how the reward program is supposed to work, what interest rate you'll be charged and what grace period you'll be offered, if any. Most retailers post these details on their Web sites, although sometimes finding the link can be a challenge. (Call the retailer's toll-free number and ask for help if you can't find the information you need.) At the very least, ask for a brochure at the counter and get the important details before signing up.
Make it count. Given the potential impact on your credit score and the added hassle of tracking another set of due dates, interest rates and terms, you shouldn't apply for a card if you're not getting a significant break and if you won't use it frequently in the future. Stick to retailers you use the most, and take maximum advantage of any discount. If you're getting a one-day discount, for instance, you might try to do most of your back-to-school, home improvement or holiday shopping at the store the day you apply.
Opt for the co-branded card, if possible. Some retailers offer two cards -- their in-house version that can be used only at their stores, and a co-branded card (typically a Visa or a MasterCard) that can be used anywhere major credit cards are accepted. The co-branded cards typically have lower interest rates and better terms; many also offer better or additional benefits. Plus, major credit cards are typically treated better by credit-scoring formulas than store cards, which tend to have lower limits and reduced credit standards for applicants.
Pace yourself. Apply for no more than one or two of these cards a year, preferably with a six-month waiting period in between since that's about how long a newly opened account can depress your credit score.
Transfer your balances. The best way to use a retailer's card, or any credit card for that matter, is to pay off the balance in full every month. If you can't and won't be able to pay it off within a few months, consider transferring the balance to one of your lower-rate cards (either by phone or by using one of the low-rate card's convenience checks). You'll probably have to pay a balance-transfer fee, but the cost could be more than offset by the interest savings.
Use your benefits quickly. As frequent fliers have discovered, the more rewards points created, the harder it eventually becomes to use them. It's generally better to use any retail card benefits as you earn them, since the retailer may change the rules at any time.
Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.
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MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.
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