If you’ve looked through any catalogs, you’ve probably seen an offer at one point or another for a catalog credit card. While these are still considered credit cards, there are key differences between catalog credit cards and traditional credit cards that you should know about before you apply.
How Catalog Credit Cards Work
A catalog credit card is a card that can only be used for purchasing items in that specific catalog, unlike a traditional credit card which the cardholder can use at any merchant that accepts it. Since most catalogs now offer their inventories online, catalog credit cards are also available online, and many consumers receive an instant approval. These types of credit cards are frequently available for merchants that sell home décor, furniture, jewelry, clothing, and electronics, although all types of catalogs offer them.
When you use a catalog credit card, you are able to pay for the item or items purchased with monthly payments, instead of paying for it all at once. In some cases, the merchant requires you to put down a deposit. Certain cards have a “same as cash” option, where you pay no interest if you pay off your purchase in full within a set period of time (often 90 or 180 days).
Catalog credit cards report information to the credit bureaus, which means they affect your credit in the same manner as traditional credit cards.
Applying for a Catalog Credit Card
The application process is a bit different for every catalog credit card, but when you apply online, you typically start by clicking a link that says “Buy Now, Pay Later” or “Apply for a card and buy today.” Alternatively, the site may have a link with the name of the store card on itDepending on the site, you may be taken to the credit card application right away, or you may have to enter your email first, and then click on an application link that the site emails to you. Standard application information includes your full name, address, phone number, and identification information (your Social Security number and date of birth). You may also need to provide your income.
Common Catalog Credit Card Features
Every catalog credit card has its own terms and features, but there are several commonalities that these cards usually share, which include:
• A fast application and approval process
• Lower credit limits than traditional credit cards, often between $300 and $500 (like any credit card, these limits can go up in time)
• Accepting of consumers who lenders consider higher risk, including those with a subpar credit history or a lack of credit history, and those with low incomes
Merchants that offer catalog credit cards are able to accept riskier applicants because the cards can only be used for their own items. If a cardholder defaults, the merchant only loses whatever merchandise the cardholder bought and didn’t pay for, instead of being on the hook for credit the cardholder used at other stores.
Catalog credit cards tend to have higher interest rates than traditional credit cards, although this isn’t always the case, and some offer 0-percent APR. Certain catalog credit cards don’t require an employment check or a credit check.
The Advantages and Disadvantages of Catalog Credit Cards
The primary advantage of catalog credit cards is how easy it is for consumers to get approved. If you have had credit issues in the past and other card issuers have declined your applications, then a catalog credit card could be just what you need. You can get an instant approval, purchase the items you need even if you don’t have enough money to pay in full yet, and rebuild your credit by making your monthly payments consistently.
The biggest disadvantage that comes with catalog credit cards is that you can’t use them at any other locations, so your buying options are limited. You may also be tempted to purchase more from the catalog than you would have if you didn’t get the catalog credit card, which makes it important to exercise discipline with your purchases.
The terms of catalog credit cards, in particular the interest rates and credit limits, are sometimes lacking when compared to their traditional counterparts. However, if you use your card responsibly, interest rates are less of an issue and your credit limit will go up after you’ve built a history with the card.
If you’re interested in making a purchase but don’t have the cash on hand, a catalog credit card is a smart choice. It’s also a great way to improve your credit. Just make sure that you understand the terms of the card and that you pay your bill on-time every month.