Editorial Policy

Catalog Credit Cards

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By Eva Norlyk Smith, Ph.D.
May 22, 2009

Catalog credit cards, or merchandise credit cards as they are also called, are unique in the universe of credit cards. With few exceptions, they offer guaranteed approval and high credit limits regardless of your credit rating or credit history.

With an initial credit line of upwards of $7,500 and offers of frequent credit line increases, these cards can appear like a real find. This is especially the case for people with bad credit, who otherwise can choose only among unsecured credit cards with limits as low as $300, or prepaid credit cards, where money has to be preloaded onto the card before it can be spent.

There is one critical difference between catalog credit cards and standard credit cards, however. You can use a catalog credit card only to purchase products and services sold by the card issuer. In other words, a catalog credit card will not give your budget the cash infusion that a standard credit card would add.

The main advantage of getting a catalog credit card is that it enables you to faster rebuild your credit and get offers for standard credit cards with high limits. Catalog credit cards report frequently to one or more of the major credit bureaus, and as long as you are regular with your payments, this will help you to quickly make strides towards improving your credit.

Here is an example:

If you apply for an unsecured credit card for people with bad credit, the best you can hope for is an initial credit line of $300. This credit line will increase regularly as long as you keep current on your credit card payments. However, it will take a long time to build up to the kind of credit line you get with a standard credit card.

In contrast, if you take out a catalog credit card with a $7,500 line of credit, for example, your credit report will show that you are responsibly handling a credit card with that high a credit line. Over time, this might prompt other lenders to offer you a standard credit card with a high limit, e.g. $5,000.

If you decide to get a catalog credit card, beware of impulse purchases that get you deeper into debt. You will receive many tempting offers for things you may or may not need. Before spending money on something, evaluate if this is something you would normally purchase, and if the cost is reasonable.

Also be sure to carefully study the Terms and Conditions of the card, and play the rules to your advantage. Otherwise you could end up spending money on a card that offers you a lot of services and goods that you don’t really need.

The key to benefiting from Catalog Credit Cards is to educate yourself and become a savvy consumer. Read the next section to learn the important things you need to know if you are considering taking out a catalog credit card.