When at the checkout at Best Buy, the salesperson has probably asked you if you wanted a Best Buy credit card. Be careful before accepting any such offers, making sure you fully understand the interest rates, advantages and disadvantages.
The clerk may actually be offering you one of two different card offers. The first is for a Best Buy in store card and the second is for a Reward Zone MasterCard good at any store.
The Best Buy Credit Card
The main advantage of getting a Best Buy credit card is that the company offers a zero percent interest rate if you pay off your purchases in full within a specified time frame, usually a year. This is a great way to save money, if you can pay off the card on time.
A secondary advantage of a Best Buy credit card is that making purchases with the card increases the Rewards Zone points you can earn by one for everything you buy. This is a modest improvement over purchases made without Best Buy financing, but is an improvement, nonetheless.
If you fail to pay the balance in full within the agreed upon time frame, the average interest rate on a Best Buy in-store card is very high, between 24 and 28 percent during 2011. You owe back interest from the date you first bought the item. An increased interest rate is charged, if you fail to make your regularly scheduled monthly payments on time. This rate also applies to future purchases.
Many consumers complain that Best Buy grants low credit limits on their cards, sometimes as low as only $300. You can use a Best Buy card in the store only, limiting your spending power. Applying for unnecessary credit cards can decrease your overall credit score, because it decreases your earnings to available credit ratio.
The fine print on the Best Buy credit card application indicates that if you do not qualify for their card, usually due to a poor credit score, they can automatically give you another credit card, the annual fee Gold MasterCard. This means you will have to pay an annual fee to have a card with a high interest rate and a low credit limit.
The Best Buy MasterCard
Consumers accepting a Best Buy MasterCard are getting a card useable by wherever merchants accept MasterCard. There are rewards given for purchases with this card above and beyond those given for either the Reward Zone program itself, or those awarded to those making purchases with the in-store card. If you accumulate 250-points, you get a $5 certificate good toward future purchases. Interest rates on this card average around 17 to 18 percent. This card had a $59 annual fee as of 2011.
Before accepting either Best Buy credit card options, be aware of these details to make an informed decision.