07 Dec Don’t Cave In and Apply for Department Store Credit Card
Tis the season for Christmas spending, and this weekend I entered a Department Store against my will. I hate shopping, but that’s another story.
At checkout, the cheery young sales associate asked me a simple question. “Would you like to save 10% on your purchase today?” (I just love this sales pitch. ) My wife was about to run away because she saw the blood drain from my face, and she immediately found the shopping cart wheels very interesting.
I replied: “Sure I would love to save 10%, but I am not willing to fill out one of those nasty little contracts of adhesion that wreck people’s lives and destroys families.” I wasn’t nasty, mean or rude to the young woman, but when our conversation ended, I think she felt differently about her offer.
Department Store Credit Cards are evil, and I will gladly tell you why. Retail Stores are facing hard economic times. They depend upon consumers to spend money. Historically, Americans are great consumers, especially at Christmas time. Now that many Americans are facing tough times, an extra 10% here and there can go a long way. The current reports are that the Christmas shopping season is looking bleak.
Therefore be prepared for the Retailers like Target and others to pull out all the stops on getting you to sign up for a store credit card. Why you ask? Because retail stores like Target like to make money two ways. First, on the retail margin on the items that you purchase. This can range from a couple of cents per item to big dollars. Second, the stores can make money on the back end by financing the transaction; think of Ford selling cars and financing them through Ford Motor Credit.
The interest on a store card is something else, and despite having a phenomenal credit score, you can still be facing financing charges of over 20%. So, the retailer is hoping that you do not pay off the debt. Likewise, the agreement may contain a security interest in the items that you are purchasing, so that if you don’t pay for it, the item purchased can be repossessed.
So, in essence you, the consumer, are being duped, in my opinion, because the retailer is making you an offer which is not in your best interest, they don’t want you to know the details, you do not have the time to read the agreement, they are asking you to make a snap decision based more upon emotion rather than logic, they are enticing you by a discount, and they are failing to disclose the details of the contractual agreement that you are being asked to enter.
All this sounds wonderful for the store and bad for the consumer. Stick to cash, it still works, and by paying cash, you are protecting yourself by not paying more than you should have for the product.
This post was written by Carmen Delluri, Esq. of The Dellutri Law Group, P.A.
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