Department store & retail credit cards have been around for a long time, and are still widely used by merchants looking to keep long-term customers. They are a great option for people who regularly shop in a specific store. These cards generally offer greater incentives for making purchases than can typically be found by a standard card.

In today’s tough economic climate and competitive retail market, stores need to find ways to vie for valuable business. Therefore, it pays to shop around to see what similar stores may offer in their department store cards, to find out where you will receive the most benefit.

As with any type of credit card, you want to carefully read the fine print, as there can be many hidden costs that come with them. It is also worth noting that these cards will often carry a high rate of interest on outstanding balances. If you know that you will likely be carrying a balance from month to month, you’ll want to sit down and do the math as to the value of the reward you will receive versus the interest that you will pay.

Unlike a regular credit card these types of cards have much less flexibility built into them by their nature. Things such as cash advances, balance transfers, and bill payments for anything other than the stores balance, will generally not be offered. There are often fees for various transactions, which are one of the ways stores earn additional money. You can also only redeem points for merchandise that the store offers. However, some stores may offer air miles as an incentive.

Certain cards may require an annual fee, and offer an introductory low interest rate. Sometimes you will be able to gain additional rewards by making your first purchase, or making purchases at specified times. These are popular promotional tools for stores to encourage spending at otherwise slow shopping times. It can be well worth your while to take vantage of these promotions, to save money and/or qualify for greater rewards on items you would’ve bought anyways.

It is worth noting, that there will generally be a large push at the holiday shopping season to get people to sign up for department store and retail credit cards. At these times you will often be able to get some kind of free gift on the spot, or a coupon amount to be redeemed with your first purchase. In those cases they often require a minimum amount to be spent, such as $100. Again this can be a good way to save money if that was the purchase amount you were going to make anyways.

Because of the nature of department store in retail credit cards, you want to make sure you don’t collect a number of these cards from different stores. Their high interest rates and limited use means that balances can easily be racked up, for what are typically non-necessity items. Penalties for missing a payment or carrying a balance can be substantial, therefore you want to always make payments on time, and ideally only use these cards if you know you can cover the balance each month. This means keeping track of receipts, and not allowing stores to raise your credit limit without your approval first.

Department store in retail credit cards have many benefits for items you would want to buy anyways. You can often get additional rewards and discounts for merchandise, which will save you money if used responsibly. Note that keep your credit rating strong, you should never max out the limits on these credit cards, or any other credit card for that matter. It is important to know yourself, your spending habits, and where your weak points are to manage your credit effectively. Be honest with yourself, and give good thought to how these credit cards fit in with your overall financial picture.