This is the worlds leading source of financial content on the web, ranging from market news to retirement strategies, investing education to insights from advisors.
Forex Forever!

Costs And Benefits Of A Home Depot Credit Card

Author: Christopher Williams

In light of the massive data breach at Home Depot (HD) that affected 56 million of its customers, you might not be so excited to say yes to that Home Depot credit card offer. But let's put that incident aside and look at the company's credit offerings using more financially based standards. Should you say yes when the sales associate makes the offer to you?

Two Different Cards

First, we have to clarify. In its consumer division, Home Depot offers two lines of credit – the consumer credit card and the home-project loan. The home-project loan is a line of credit specifically for a larger project and comes with a 7.99% interest rate and up to a $40,000 credit limit. You can learn more about that here, but for this article, we'll focus on the consumer credit card.

The Pros

Maybe your emergency fund isn't as healthy as you would like, and one winter day you notice that your home is very cold.

You find out you need a new furnace but there's no money in reserve to pay for it. You know that your tax return, due to arrive in about two months, will cover the furnace so you head to Home Depot and put the furnace on your Home Depot credit card.

Because the store will give you a minimum of 6 months on purchases over $299 to pay off the furnace without incurring interest charges, the card is perfect. There's also no annual fee, payments as low as $25 and, according to the literature, you'll receive special offers.

The Cons

There's certainly no perfect financial relationship and that's true in this case. The first downfall of this card is the interest rate. If you have perfect credit, the lowest you'll go is 17.99%, but you could be charged as much as 26.99%.

Next, that 6-month (or sometimes more, with special offers) interest free period isn't really interest free. Home Depot will still charge the interest, but if you pay off your eligible purchases within the specified time period, you won't pay the interest charges. If you're even one day late, all the interest you didn't pay during the grace period is added to your balance. To be fair, that's how most no-interest agreements work with the majority issuers – not just Home Depot.

The Bottom Line

Any card that you apply for becomes part of your credit report and that could lower your credit score, even if you only use the card once or twice per year. (See Will having several credit cards hurt my credit score?) Most personal financial experts advise against applying for store credit cards, primarily because of the high interest rate. But if you run into an emergency where you need to make a big purchase for your home right now, the Home Depot card might afford you the opportunity to pay it in full without incurring any interest charges.

For more on store cards, see Store Credit Cards: Do The Incentives Pay Off? As for dealing with a credit card breach – at Home Depot or elsewhere – see 7 Ways To Protect Yourself Against Credit Card Hacks.

last five articles

#1665 Review: Discover it Miles Card

Author: Ethan Harris

Are you looking for a cash-back credit card with generous rewards and no annual fee? If so, we think you'll like the new Discover it Miles card. Read on to learn more about this card, its benefits and the fine print.The Bank Discover Financial Services (DFS) is a publicly ... see more

#1012 Top Money Management Apps For 2015

Author: Michael Taylor

There are two types of people when it comes to money: those who spend and those who save. The savers have a natural aversion to spending money: they must think, analyze, and weigh the pros and cons before making a purchase. The spenders, on the other hand, tend to be more liberal with their money... see more

#1253 How Your VantageScore Credit Report Is Calculated

Author: Christopher Jackson

Since the 1970s, credit scores have played an increasingly vital role in the lending industry. Fair Isaac and Company began assigning credit scores to consumers based upon various factors over 40 years ago, and these scores are now reviewed not only by prospective lenders, but also by landlords, ... see more

#271 Do Oil Prices Affect The Auto Industry?

Author: Christopher Harris

In economic theory the use of complementary goods is associated with the use of another good, while substitute goods are goods viewed by consumers as similar or comparable in some way. Within the auto industry, vehicles and petroleum are considered complimentary goods whereas gas-guzzling trucks ... see more

#235 Can You Use a Healthcare Exchange After Open Enrollment?

Author: Matthew Davis

If you're looking to buy insurance from a healthcare exchange, timing can be critical. That's because, if you didn't sign up prior to March 31 this year, you'll ordinarily have to wait all the way until Nov. 15, when the next open enrollment period begins.However, there are quite a few exc... see more