Harbor Freight sent me a credit card preapproval email today, and I found myself irritated by it.
It’s been nearly 4 years since Harbor Freight launched their credit card, and I feel that they are constantly promoting it and their paid membership program.
I don’t have a high opinion of store credit cards. Lowe’s recently upped their interest rate to an APR of 32%, and other home improvement and tool retailers have similar rates.
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Harbor Freight’s rate is 30%, and the same for Home Depot. Technically it’s 29.99%, but I tend to see things in round numbers.
I was raised with the mindset that if I want but don’t need something, I should buy it in cash – or save up until I can. I was also raised to believe that credit card bills should be paid off in full. While it’s not always possible, I was taught to not overspend or carry a balance if it can be avoided.
My parents clipped coupons and made compromises to avoid unnecessary debt.
Harbor Freight’s terms seem reasonable.
Save 5% on “qualifying purchases” or pay zero interest if you make purchases over $299 with an installment plan.
Objectively speaking, a 5% discount can add up to a lot of money saved, IF you pay off the balance every month. And if you can’t pay off the balance every month, 0% interest can work out well if you sign up for the monthly payment plan. NEVER miss a payment either way.
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I have a store card to an electronics retailer, and it seems that every month they email me about my available balance. “SPEND MORE!!” they seem to say. That retailer offers a tax credit on every purchase. Like Harbor Freight, they also have financing offers, but I take advantage of the tax discount and pay off the balance every month.
I don’t have cards at Home Depot, Lowe’s, or Harbor Freight.
Should I?
Objectively speaking, I could save some money every year with the 5% discounts they offer. I tell myself that maybe someday I’ll sign up, when I can make good use of the account-opening discount.
Is it foolish of me to forego a 5% discount on “qualifying” everyday purchases?
I remember the first time I signed up for my own independent credit cards, rather than a debit card. I was maybe 20 years old, and I wanted a Citi Dividend card, which offered a cashback percent on every purchase.
Citi called me – I was in my car in a parking lot before heading to or from class – and offered me another credit card on top of the one I was applying to.
Citi said I also qualified for their Professional card. I would get $100 worth of “Thank You” reward points for opening the account, and there was no annual fee.
Okay! I signed up for the two Citi credit cards.
I now consider Citi’s practice to be exploitative. I was a college student with barely any income, and Citi was throwing credit card offers at me.
I like to think that I have been fairly responsible over the years. I sometimes carry a balance, but try to avoid it. Sometimes it’s unavoidable. I also make some purchases in installments if there are zero-interest opportunities.
Objectively, I feel that store cards can be a good idea.
If I have $200 and a new TV costs $500, I save up until I have $500. I have some friends who, with the same $200, would spend $2000 on a new TV.
It was drilled into my head to not spend above my means.
If the water heater fails unexpectedly and someone doesn’t have the cash on-hand to replace it, that’s one thing. The same goes for other necessities, such as car tires, an oven, and so forth. But buying a larger flat screen TV? I was raised with the mindset that luxuries and non-essentials should be saved up for.
A 5% discount can amount to meaningful savings. Zero-interest financing can amount to meaningful savings compared to carrying a balance on a separate credit card.
Still, there’s always a voice in my head saying that store cards are a bad idea.
Emotionally, I feel that store cards have terrible terms and high APR interest rates, and increase the chances of overspending.
Store cards aren’t just about financing charges or convincing consumers to spend more. Let’s say I have a Home Depot card, but not a Lowe’s card. Where would I be more likely to buy a new appliance from, if limited to just those two retailers?
I can understand why stores push them so hard.
I have a clothing store card – either a Visa or Mastercard – I forget – but I rarely use it. It started off as a store card, but at some point was switched to a use-it-anywhere card.
I remember signing up for it in-store, and vaguely recall adding additional items to my order to best take advantage of the sign-up bonus savings.
Today, I have just the one store card to an electronics store, and a department store card as a secondary under my wife’s account.
Whenever I’m asked to sign up for a store card, my automatic response is to decline. Even with the Harbor Freight email I received just now, my automatic response was “no, thanks.”
Objectively speaking, they seem like good deals IF one pays the balance off in full every month or strictly adheres to zero interest financing terms without ever missing a payment. Still, I am vehemently uninterested in store credit cards.
I take advantage of similar terms at an electronics retailer, and so my bias against Harbor Freight’s card seems almost hypocritical. I’m okay with that, as personal opinions don’t always have to agree.
I’m interested in your opinions – what’s your take on store cards like Harbor Freight’s?
Mark M.
I had a HD credit card for a number of years and while it had perks, it also made it too easy to spend, so my unnecessary purchases outpaced my savings and I ended up getting rid of it. And I think that’s the case almost universally- yeah you can play the game, and it’s kind of fun, but you spend more so it’s a net loss so to speak. The only store credit card I use and have zero qualms with is Tractor Supply, because the ONLY thing I buy is feed and ag supplies that I really would buy one way or the other, so the savings and tracking is worth it and I come out ahead compared to not using it.
potato
Unsolicited preapproved cards sent to you are predatory trash
Robert
And worse, they are a security risk. I always have to shred the damn things, like AMEX. Because of the identify theft risk, it should illegal to unsolicited preapproved credit cards.
Vards Uzvards
https://www.optoutprescreen.com/
Stuart
Doesn’t work as well as it should.
Companies have found all kinds of loopholes.
My cellular provider sends mailings “we forgot to offer you this credit card application at your last transaction at our store.” But I don’t go to the store, I pay my bills online.
My bank sends offers. And in this case, HF sent a preapproval notice seemingly because we have a pre-existing relationship as I’m a prior customer and signed up for the newsletter.
Stuart
Can’t shred an email.
Robert
True, though sometimes there’s a shredding sound on delete. My ire is mostly about the physical cards sent in the mail. I’ve done the opt out, but the worse seem to ignore it.
Jared
I feel the same way., including that credit card debt must be avoided at all costs.
I’ve signed up for store cards twice in my life – both times with a specific plan in mind. It’s not that “saving 5%” everyday isn’t a good perk – it’s that it’s too easy to forget a payment, talk yourself into spending more to get a bonus or otherwise make small mistakes that wipe out your savings.
Both times I got store cards it was to get what seemed like a worthwhile sign-up bonus. For example, I recall one from my local hardware store was like 10% off your first purchase and a free drill kit if you spent over $1000.
I was renovating my house at the time, so I signed up because I had a roughly $3000 purchase to make – might as well save $300 and get a new drill right? I paid it off that day and cancelled the card a month later.
I still think that’s the best way to treat store cards: have an explicit plan, execute it and get out.
eddiesky
This is best. I saved a considerable amount on a purchase from Lowes and the rate was 24months at 0% interest (do NOT miss a payment nor be late).
Otherwise, I would cut the card up.
It is rather annoying, and I know its the clerk’s job, that at either Lowes or HD, they always ask if I want to apply for their storebrand Credit card. And I decline or say I have one but only for large purchases with no financing.
Don’t get me on having to bring my own bags…
Adam
The rates are horrible across the board, but if you can pay cash, you should be able to pay credit and take advantage of the benefits.
A few things I rather take advantage of extended 0% financing, so I have the HD consumer card for those purchases, and smaller ones, I take advantage of the higher rewards on the Pro card. Both five you one year returns, which more times than once proved quite beneficial.
I found myself in Lowe’s buying a couple generators, and the extra 20% off your initial purchase (and one year returns on other items) got me to sign up there.
But for both retailers, the items typically aren’t being bought without the cash to bankroll it in the first place
Dave
In my area of the midwest we have Menards, not something many of you readers likely have. They offer 11% back on any purchase, much of the year now in the form of a store rebate. I use their credit card to get another 2% back and pay off the balance in full all the time on purchases I would make anyway. Then when you get the 11% back and make another purchase, they often have the 11% back running again so effectively I get “26% back” on the purchase I’d have made anyway. Worth it in that aspect. I still price check for common things against Amazon, HD, Lowes, etc and they’re almost always the lowest price supplier on the name-brand item.
Nathan
Make sure I read it right. You get 5% off whatever you buy and you could make a payment before the month is up and not pay interest
Or
Not get the discount and pay over 6 months or so with no interest.
Sounds like they are doing the same thing as klarna and affirm. That you are on some websites
TomD
It’s very common to have the “option”.
The stores want you to use the store card because then they avoid interchange fees (a 2-3% savings for them) and some will “pay” you to do so.
Jimmie
Speaking of Harbor Freight email…When I place an order, I’ll usually create an email alias that’s only ever used for that company. If I start receiving spam to one of those email aliases, I’ll know which company leaked or sold my contact information.
Lately Harbor Freight has been sending ad flyers and coupons to an email address that I’ve only ever used when dealing with the old MLCS router bit company. I’m not sure how Harbor Freight acquired this email address but I can assure you that I didn’t provide it to them.
DAVID PERKINS
I have done this only to find that companies are not selling my data. I still only get spam on my primary email address. And now I have dozens of extra email addresses that I have to maintain.
Ray
I learned there are companies that offer this as a service – I started using SimpleLogin earlier this year and it has been great. I have an endless supply of different email aliases which forward to the same inbox and manage from one dashboard. Much more convenient than making different email addresses like I used to do.
Marc
These discounts and pay over time offers are gimmicks to entice you to get a card. Usually, people do not pay off their balance or do not make one payment on time and then ALL of the interest comes due.
I have no store credit cards and have not had one in decades. We have one Marriott Visa card that we use for everything and pay the balance off each month. I believe its interest rate is also 29% which is usury in my opinion. We get points that we can use towards free hotel stays. Had it for over 7 years; use it often; and have never carried a balance. Always paid off. But we have had lots of free hotel stays which adds up at $200-300 per night. Same as the Airline credit cards. If you fly a lot, it can make sense.
The key is never accrue a balance that you cannot pay off at the end of the month. IF you buy something that expensive, wait and save your money.
30% interest when money costs the banks 3% or so is just thievery.
There are credit cards with lower rates. Just get one of them if you must carry a balance over time once in a while.
Maybe the discounts or payment over time are helpful to an established contractor with good cash flow. But for newbies or homeowners, these cards are just money traps. Stay away.
jayne erin defranco
Who needs it. If I can’t afford something I won’t buy it. My parents told me this when I was growing up. And I never buy stuff I can’t afford.
Nathan
One other thing pointed out to me by an it person. Many of these stores lately have made themselves data brokers. It’s a legalese thing so that they are legal data collection entities and are allowed to sell that data.
S
I go against the grain here. I have 5 store cards. I started off with a target card, which was later upgraded to a MasterCard.
Then I have a Menards, home depot, harbor freight, and amazon cards. I specifically only use them for purchases that hit the 0% for 6+ months financing .
The majority of the time, I have the money for the purchases–most large items like that, I’ve been planning for the purchase for at least 3 months. But why spend all my money now if they’ll let me make payments over an extended timetable with zero consequences? I can put that money to better use elsewhere.
The only addition is to be anal about tracking which offer starts when and when it expires to ensure I have it paid off, but it’s an extremely easy way to double my financial leverage without changing all that much about my spending.
Al
I use HFT for free financing. Buy a new tool chest and pay it off without interest over 6 months. Get 5% or 10% back on all other purchases…pay it off every month.
Same for Home Depot or Lowes. Use it for free 12-month financing with zero interest. Or, buy that tool on sale now…pay it off before any interest hits.
It adds some flexibilty to spending. On those pay weeks when the house payment hits, it’s nice to be able to spend $200 on a time-limited sale item.
Also, your purchase history is always available. Nice to lookup which exact screws were used, paint colors, etc.
Scott F
Credit cards are very dangerous in the wrong hands, if you do not have the ability to pay them fully then using them is usually an awfully bad idea.
That said, if you do have the means to pay them fully (or pay within a 0% period if using that deal), credit cards are a very powerful tool to leverage. I have all of mine set up to auto draft, and find that functionality pretty simple to use so it is not a juggling exercise to ensure things are paid – unless you are spending money you do not have.
I personally have an array of cards, each with slightly different perks, and I use them for my entire life. Which one I use for a purchase is determined by the maximum reward I can get back. I have Amazon and Tractor Supply cards for the 5% benefit, my tractor supply card provides 3% back at grocery stores as well, Costco card for 4% on gas, Visa Autograph for 3% at restaurants, Bank of America Cash Rewards card for 3% on up to $1500 per quarter of online purchases (category can be changed once per month, several good options in here), and then my Capital One venture card for 2% back on any other purchases where I can’t otherwise get more (this card is my least preferred because the rewards are hard to utilize at 1c/point rate unless you travel a lot). At the end of the day, I will be spending this money any way, and although in a vacuum the 2% return on my $20 purchase is not much ($0.40), do that to every transaction and it ultimately adds up.
Of all of the cards, only one carries an annual fee – that is something to be very careful of. Several also had one-time signing bonuses of usually $200, I give extra credit for those cards especially if they have a good cash back category as well to leverage. Even at 5% back, you need to spend $4000 to earn that $200 signing bonus – depending on your spending habits that may change the better deal.
I do think store cards typically have less “perks” that go along though – typically the only reason to get one of them is if it gives a 5% return on purchases. The mainline credit cards often offer things like warranty extensions, travel protection, and other random/sometimes unexpected benefits that you can take advantage of if you realize they exist.
All of the above said – the tides ARE turning with merchants and credit card fees. The days of getting a 2-5% kickback on every purchase are dwindling as more establishments add a 3-4% credit card price adjustment to account for the fees they have to pay. If you are paying 4% to earn 3% back, you’d better be paying cash for that transaction…
Vards Uzvards
You could replace that Venture card with a Double Cash card from Citi, and it will give you the same 2% back on all purchases, but without an annual fee.
Scott F
I’ll look into that – thanks! Sounds like that 2% is more liquid as well – I had a hell of a time using my built up venture points given I practically never fly or stay in hotels. Which also makes the foreign transaction fee benefit a bit less meaningful for me – the only place I’ve used that benefit in the last 5 years was buying from Olight!
Vards Uzvards
The Amazon Prime card (from Chase) also has no foreign transaction fees. Many, if not all, cards from Capital One have no foreign transaction fees either.
AaS
I always use the house credit card for each store. You get maximum return flexibility as they’ll look up your receipts and an extended return window without any drama. Plus extra cash back points, bonus offers, all that promotional stuff.
Retailers usually partner with a bank to offer their house charge card. The banks offer these branded credit services with lots of options and features the retailer can customize.
Boo on both HF and Lowe’s as they opted to DISABLE the “Amount To Avoid Interest” payment option. They leave it to the customer to figure out a correct payment that covers the current month’s share of any promotional balances plus last month’s carryovers with interest plus the current month’s non-promotional purchases. If you get this number short by a cent, they charge the 29.99% interest rate against your AVERAGE DAILY BALANCE.
In other words, they actively make it hard to manage your promotional balance and trick you into either paying off sooner than you should have — you probably traded the basic 5% rewards for a 6 or 12 month financing offer that visit — and paying interest charges even if you are scrupulous about paying off your current balances every month (less the promotional balances, obviously).
Positive shout out to The Home Depot here for choosing to ENABLE the “Amount To Avoid Interest” option, so it’s really easy to pay your balance due each month while carrying your promotional balances to their full term and ensuring that you don’t get hit with finance charges.
When I look at my monthly charge balances, I can see very clearly that The Home Depot’s choice to allow me to avoid interest charges might lose then a few dollars in fees but gains them hundreds of additional dollars each month in my shopping habits.
Nathan
Any tool is dangerous in the wrong hands. But yes read the whole agreement
I do have a home Depot account but not credit card you just about have to to order thing for delivery. And lately for some big things it’s cheaper and far easier to just have something delivered
MT
I don’t really get irritated or annoyed with these kinds of things. I just send them through the shredder and get on with my day.
Wayne Stone
A good rule to follow and it is sometimes hard, Pay as you go and never owe
KW Stone
Bonnie
My take is that I have *one* credit card, which I got through my bank. I do not, nor will I ever have, any other credit cards. I do not carry a balance on it. People can talk about “beating the system” all they like, but it’s mostly nonsense.
Bill
I only purchase using a card because of the points, etc., that I can get. I “rarely” let the balance roll over. So, with the understanding that you will be paying off the balance every month, what “goodies” are they giving you?
Mike
I use an Amazon rewards credit card for everything, and I pay off the balance at the end of the month. My wife uses a Kroger credit card for everything and pays it off at the end of the month. We don’t carry a balance.
I will get a store credit card if it gets me some really good deal I can use right now. I got a Lowe’s card when it would either get 12 months with no interest or $200 off a John Deere tractor. I took the $200 off and paid the card off right away. LIkewise, I got a Best Buy card when we were buying a washer or dryer, don’t remember which, and it got me money off at the purchase. Paid it off right away.
The Lowe’s card is put away somewhere. The Best Buy I keep around because it’s a Citi card and I can use it to get early access to some concert tickets.
The only reason to get a store credit card is if it gives you something up front. Not points to use later or any of that crap.
Vards Uzvards
Years ago, around the time I got my first credit card issued by an American bank, I also got this book: https://www.amazon.com/dp/080505314X/
The book provides very good advice, dispels some myths and clarifies a few things about plastic payment cards. Most of it should be still applicable, even about a quarter century later.
Analyst
Amazon does the same 5% off in rewards or 6 months interest free. My big problem with it is that once an order reaches $50 the default choice is the 6 months interest free option so one has to make sure they change it at check out.
I found this out the hard way… To Synchrony’s credit they will take the 6-month gig away and give you the 5% back in rewards if you contact them. That still takes time.
I collect the rewards and see what tools I want on Prime Day and/or Cyber Monday.
Plaingrainy
I don’t look at high interest as a penalty. I am grateful that they were gracious enough to loan me money when I needed it, and pay them a little bonus back sometimes, What makes me sad is watching people die with huge bank accounts. Living their lives scared to spend anything. People that have family’s need to be highly responsible with their money. Because they need to take of their family. Single people not so much. Buying a less safe tool, just to avoid credit card debt isn’t that wise in my opinion.
Plaingrainy
Left out CARE from sentence. I keep forgetting to proof read my posts, as there isn’t any editing on this site.