Forum: money.stackexchange.com
Tags: <credit-card><interest-rate><credit><shopping>
Title: Is it better to buy a computer on my credit card, or on credit from the computer store?
Question: I am interested on buying a computer (approximate cost USD 600).   I can pay for it either with my credit card, or apply for credit in the computer store.   What are the advantages of using one form of payment over the other?

Answers:
sents: text: Using your credit card: May earn points for your credit card rewards program Major credit cards usually have lower APR's than store credit cards, so smaller interest charges if it takes you a while to pay Convenience of all expenses appearing on one bill, easier to pay down Applying for a store credit card: May get one-time discount, or several months of no interest, for opening an account Hassle of applying for a new account Hassle of them trying to sell you credit protection, insurance, etc for additional fees
text: Hard credit pull will hurt your credit score for a brief time Additional available credit may help your credit score Additional available credit may tempt you to go more into debt Additional account may help or hurt your credit score, depending on your number of accounts and their average age May be a big hassle to close account if desired
text: In general it is far better to not buy bigger items like a computer until you can pay cash, or pay for it on credit card (to get reward points) and then pay off the card the next month
text: so you don't pay interest.
answer_details: author: money.stackexchange.com/users/5509/Steven
score: 15
sents: text: Since you have a credit card, I recommend you use it for the purchase.
text: It gets you two things at the very least: Gets the purchases reported as credit utilization.
text: If you handle that correctly, you can improve your score
text: Most card vendors give free extended warranty and return policies that a retailer or manufacturer does not without extra fees.
text: I buy all my electronics using my cards and not only does that optimize my scores
text: but I have been able to enjoy painless/better RMAs for defective products just because my AmEx card would have refunded me the money anyways and the retailers knew it (AmEx would have recovered it from them in the end
text: so it was in their interest to resolve the matter within 30 days)
answer_details: author: money.stackexchange.com/users/4189/f1StudentInUS
score: 12
sents: text: As far as the money goes, it all comes down to the terms.
text: What is going to cost you the least?
text: Look for hidden fees and costs with the store credit.
text: You will need to read the fine print of the credit agreement
text: some automatically sign you up for a service that will cost you extra money every month.
text: Compare what the costs are going to be over the term you will pay it off.
text: A good calculator to help you figure this out is http://www.amortization-calc.com/ It is designed with larger loans but works for smaller loans too.
text: Realize that you will have to add fees and finance charges into the total loan amount to get a good comparison.
text: ** Unless you NEED a computer you should wait until you can afford to pay for it.
text: Charging these types of expenses tends to lead down to a pit of debt that is hard to get out of.
text: Wanting a computer really bad is not the same as a need.
answer_details: author: money.stackexchange.com/users/None/
score: 5
sents: text: The downside of the store card is that the "deal" for using the card is typically 6-12 months of "no payments" or "no interest".
text: In reality, the "deal" is deferred payments/interest.
text: The problem is, if you miss any payment, or fail to pay the computer off in full, you'll have to pay for the accrued interest -- at a rate typically 25% or higher.
text: That means if you buy your computer for $1,000, and pay $999 at the end of 12 months, you may have to pay $250 in accrued interest.
text: These cards can be great deals, just be really careful!
answer_details: author: money.stackexchange.com/users/1288/duffbeer703
score: 2
sents: text: In my experience dealing with credit cards and store cards, you may find that the store card is much more flexible than the credit card in terms of the enforcement of the card agreement.
text: For instance, I've missed payments on credit cards and only been 1 day late and saw a rate increase, but on a store card when the same thing happened, it was like they didn't even notice.
text: Granted, this was a 100% store card with no VISA/MC logo on it, and it was through their bank.
text: This may not be true of all store cards and your experience may differ, but I felt like the store card was more of a tool for acquiring the merchandise and helping the store make a sale than it was for some big bank to make money off of my interest.
text: With credit cards, you are the product, and the bank makes money purely from interest.
text: The store, on the other hand, makes money from selling the product, and credit helps increase sales.
text: My suggestion is to avoid credit altogether as all debt is risk, but if you must use credit, you may have a better experience with the store card.
text: Of course, don't forget to consider the interest rates, payment plan, and other fees that may apply as they may affect your decision in terms of which to go with.
answer_details: author: money.stackexchange.com/users/5583/jmort253
score: 1

Summary of the answers:
Since you already have the credit card, you may as well use that. You may earn points and credit cards generally have lower APRs than store credit. Make sure you check the terms of the store credit carefully.
Credit cards have the advantage of sometimes having lower interest charges over a longer period. They also have the convenience of all your expenses showing on one bill. You can also earn points by using your credit card. In the end which to use depends on the terms. With store credit you may get a one-time discount or several months of no interest but you need to look for hidden costs. There is also the hassle of the store trying to sell you credit protection, insurance etc. On the other hand store cards may be more flexible with respect to enforcement of the card agreement. A good calculator to use to help you figure this out is  http://www.amortization-calc.com.