Signing up for a new credit card can offer you a great means of stretching your spending power.
It also builds your credit score and nabs you some neat bonuses for signing up or spending money depending on the kind of card you get. But it's also important to keep your credit card's interest rate in mind. The APR – or annual percentage rate – is the rate of interest you'll be hit with if you fail to pay off your monthly credit card bill on time.
Many stores offer their own credit cards nowadays, many offering extra benefits for frequent shoppers. But some of these store cards are also notorious for especially high APRs and relatively lame bonuses, too. Here are the worst offenders:
Even for the most hardcore gamers, 29.24% APR is a bad deal, especially when coupled with the GameStop PowerUp Rewards Credit Card's terrible rewards. The sign-up bonus is 5,000 points (roughly $5 in-store credit) for standard members, or 15,000 points (a whole $15) for GameStop PowerUp Rewards Pro members, which as an entirely separate GameStop subscription that already costs an extra $15.
Featuring a horrendous 30.24% APR for a personal account, Staples More Account Credit Card only gives you 5% back on Staples purchases and free shipping on orders over $49.99. So unless you're buying a ton of office supplies on a near-constant basis, there are plenty of other cards with way better savings, rewards, and benefits packages, along with much lower APR.
If you're buying lots of diamonds at retail for whatever reason, Zales The Diamond Card might seem tempting. It offers $50 off on your birthday, free shipping, and 10% off on jewelry repair services. Of course, this comes with a whopping 29.99% APR, which barely does anything to make up for a nice discount on a single day once a year.
The Piercing Pagoda Credit Card isn't just bad. It's unimaginably bad. With a 29.99% APR and the sole benefit of $25 off on your birthday, there is no reason that anyone should ever get a Piercing Pagoda Credit Card. With no extra benefits or cash back for Piercing Pagoda purchases, even someone covered in piercings who constantly buy's new studs and rings gets no real mileage out of this massive dud of a card.
With the highest APR on this list at 30.74% and no benefits or rewards to speak of, the BrandSource Credit Card might actually be one of the worst credit cards ever made. Why would anyone buy it? What could you possibly hope to gain from this card, aside from horrible fees should you fail to make a payment. You're better off going with Piercing Pagoda. At least they give you a measly $25 on your birthday.
Overall, store credit cards don't tend to be the best way to go if you have other credit card options. Their benefits tend to be limited and sometimes even nonexistent, and their APRs are unusually high. Be careful when signing up for a new credit card, and be sure to do your research. Liking a store isn't a good enough reason to go with their card.
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- 10 Worst Store Credit Cards You Should Avoid at All Costs ›
When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.
A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.
One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.
The Federal Reserve
The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.
This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.
The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.
Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.
Frugal gifting often gets a bad reputation. However, this shopping method does not make you cheap — it makes you practical. Frugal gifts often avoid waste and overspending and can be just as meaningful (if not more so) as any other present.
With the National Retail Federation predicting each consumer this holiday season to spend upwards of $1,000 on holiday gifts amidst an economic recession —this year might be the perfect time to reconsider your spending budget. We've formulated the ultimate list of frugal gift-giving ideas to get you started.