Factors in Which a Best Buy Credit Card Could Hurt Your Credit

When it comes to electronics, Best Buy is a top choice for many consumers due to their unbeatable prices and high-quality products. To make the most of their shopping experience, many customers choose to apply for a Best Buy credit card, which allows them to save money, earn points, and purchase the items they desire without any concerns about their credit score.

Before applying for the Best Buy credit card, it’s essential to evaluate its advantages and disadvantages carefully. Best Buy is undoubtedly a well-known retailer, particularly during the holiday season. However, is it practical to hold one of their credit cards? Let’s examine the pros and cons to make an informed decision.

Pro: Rewards

When you sign up for the Best Buy credit card, you’ll enjoy a range of exciting rewards that are sure to impress (and yes, we could use fancier words, but ‘exciting’ sums it up nicely). One of the most significant advantages is the 10% discount in rewards you receive right from the start, whether you shop online or in-store.

You can receive rewards in the form of Best Buy gift certificates, which can be redeemed for a discount on any purchase you make with this card. When you earn 250 points, you’ll get a $5 Best Buy gift certificate. This makes it incredibly convenient to shop for all your electronic needs at Best Buy since it’s effortless to earn these gift certificates.

Pro: Choices

Giving children the option to choose can be a great way to make them feel empowered and in control of their lives, according to parenting experts. This sense of control is something that kids crave, and offering them choices can help to satisfy that need. After all, who doesn’t appreciate having a say in the matter?

Imagine offering two options to your partner for date night. You suggest your favorite restaurant and they suggest their favorite activity. You compromise and try their activity followed by dinner at your favorite spot. Both of you feel like you got what you wanted, and everyone is happy. This approach can work in many situations, even with adults. It’s all about finding a solution that satisfies everyone involved.

If you’re a Best Buy customer, you have the option to choose between two great incentives offered by the Best Buy credit card. For purchases exceeding $429, you have the opportunity to take advantage of a special financing offer that lasts 18 months. Alternatively, you can opt to receive 5% back in rewards for all your purchases. The choice is yours!

The decision is solely yours to make. It entirely depends on your wants, needs, and what you believe will be more beneficial for your personal finances. Additionally, there are alternative financing options that you can consider, which can make managing your credit card easier.

Con: It Can Hurt Your Credit

Don’t worry about damaging your credit when you apply for the Best Buy credit card. In fact, it’s possible to avoid any negative impact on your credit score altogether. To better understand how the card could potentially harm your credit, let’s delve into the details.

When you apply for a credit card, your credit score may decrease by a few points. This is a common effect of credit card applications. However, it is important to note that it is not this specific card that negatively impacts your credit score, but rather how you manage your credit once you have the card.

Furthermore, failing to make timely payments on this card can also negatively impact your credit score. The major credit bureaus will be notified and your delinquency will be recorded on your credit report. It’s essential to prioritize paying your bill on time each month to avoid this consequence.

If you fail to pay your bill in full each month, you can expect your credit score to take a hit. Your credit report will reflect this as well, causing your score to decrease.

To avoid a credit bureau notification from the company, it is crucial to pay at least the minimum amount due on the statement. While it is highly recommended to pay the full balance, it is the minimum payment that must be made.

Keeping your balance higher than 30% with this card can potentially harm your credit score. It’s important to keep in mind that credit scores are determined by a variety of factors, one of which is your credit card balance. Therefore, it’s advisable to avoid running up the balance of your cards to maintain a healthy credit score.

To maintain a high credit score, it is important to ensure that your continuous balance does not exceed 30% of your credit limit. For instance, if your credit card limit is $5000, it is advisable to keep your balance under $1500 at all times. By doing so, you are likely to improve your credit score and increase your chances of being approved for credit in the future.

Con: High Interest Rates

Controlling our credit score is something that many of us struggle with. It’s no secret that having a good credit score can lead to lower interest rates on credit cards and loans, while a poor credit score can result in higher interest rates. However, despite our efforts, our credit score can be difficult to manage.

In 2013, the Best Buy credit card had an average interest rate ranging from 25.24% to 27.99%. This rate is considered high, especially for individuals with less than perfect credit.

It’s no secret that the rates of credit cards can fluctuate over time, especially with the economy gradually recovering. In the case of the Best Buy credit card, HSBC is the issuing bank, and they have a reputation for maintaining higher-than-average rates.

If you’re someone who consistently pays off your credit card balance in full each month, this may not hold much significance for you. After all, with no outstanding balance, you won’t have to worry about paying exorbitant interest charges. However, for those who are currently carrying a balance on their credit cards, this high interest rate can be incredibly damaging.

Imagine this scenario: You have a Best Buy Credit card with a 24% interest rate and a balance of $1500. With this situation, you are paying an extra $36 every month in interest. If you decide to make a $1500 purchase and take a year to pay it off without any special financing, you will end up spending a total of $1932 on that purchase over the course of one year.

Purchasing an item worth $1500 with a regular credit card that has a 13% interest rate and paying it off within one year would cost you around $1734 in total.