Personal Finance Advice
Store Credit: Personal Finance Advice
Spend a little bit of time in a clothing or department store and you’re bound to hear it…the manager’s voice booms over the walkie-talkies all the employees carry and in an excited voice makes an announcement that sounds a little like this: “Hey team, Sara just got another one! That makes two for today! Great going Sara!” This is usually followed by a couple of other supervisors who hop on the walkie-talkie and add their congratulations to the employee, and then the manager comes on one more time and urges all the other employees to keep up the good work just like Sara.
You might be inclined to believe that Sara has just made a huge sale, or maybe even that she stopped a shoplifter. What the manager is actually so jolly about is this: Sara compelled a customer to fill out a credit application.
What you may not realize is that clerks in stores are trained to get customers to fill out credit applications almost as much as they are trained to know about the merchandise they sell. Salespeople are given quotas to fill as to how many credit applications to bring in. In some instances, managers stress credit applications more than they do the actual sale of merchandise.
Credit is a big deal to retail stores. If a store can get you to obtain a credit card from them then chances are you’ll spend more and wind up paying some interest at some point. This makes you a more attractive customer.
Now you know why every time you go through the checkout line the person at the register asks you, “Can I save you 10% by opening a card for you today?” They’re not doing it because they really want to save you 10%. They’re doing it because they’ve been trained to and because they have a quota to fill.
Once you start to think of a store credit card as a product - instead of some sort of extra the store offers as a courtesy to their customers – then may be a little easier to decline the clerk’s offer for a credit card application. After all, if you went in to buy a bag of oranges at a grocery store and the clerk at the register asked you, “Can I interest you in this loaf of bread too?” you might think to yourself how you don’t even need the bread and how weird it is for the clerk to offer you bread at the checkout.
Think of store credit as a loaf of bread: Sometimes it’s a good idea, but you should get it when you need it instead of when it’s merely suggested to you.
Setting Priorities: Personal Finance Advice
Unless you live in a rent-free cave somewhere you probably have certain bills that you need to pay each and every month. If you have more than enough money to cover all your expenses then you may not put much thought toward which bills need to be paid before others because everything is covered, but if you find yourself pinching pennies then you may need to do some prioritizing with your bills.
Here is what you need to keep in mind: Ignoring some types of bills will result in annoying calls from a creditor and some horrendous late fees. Ignoring other types of bills will result in getting thrown out of your home or losing your car. The trick is to put certain bills first and then wait on the other ones, but only if you absolutely have to.
Prioritize your bills in this order:
1. Your mortgage or rent
2. Your health insurance payments
3. Your utilities
4. Your car payment
5. Your unsecured loan payments
6. Your credit card payments
The reason why the bills are listed in this order is simple: even if you are having trouble meeting your financial obligations you still need to have a place to live and the ability to seek medical care if necessary. You want to keep your lights on and the heater running and you don’t want your car repossessed. Loans that aren’t secured by some form of collateral and credit cards should be your last priority. Lenders for these type of accounts expect some customers to be late once in a while so they make accommodations – albeit expensive accommodations – for an occasional late payment.
In other words, you aren’t going to lose a credit card account because you’re late on your payment one month. You’ll probably get a higher interest rate and a hefty late fee, but you’ll keep the credit card nonetheless. Miss one car payment and technically your lender can come take your vehicle.
Don’t ever put your credit cards as a first priority, even if the creditors who call you are really aggressive. Don’t skip out on basic needs in order to make an unsecured loan payment. Your basic needs come first, long before a credit card payment . . .
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