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How Zero-Interest Cards Could Harm Your Credit


Best Buy's "featured offer" seems like a no-brainer for buying brand-new electronics — two years with no interest comes across as a great way to buy it now and pay later without punishing interest charges. If you're not turned off by the notion of being accountable for yet another credit card, then here's something else to consider that might make you think twice about financing your new TV with a store's zero-interest proprietary card.

You know that a credit inquiry can temporarily shave points from your score, but the low credit limit on these store cards may have a more negative impact. Your credit-to-debt ratio makes up a large part of your overall credit score, and The Wall Street Journal emphasizes that "credit bureaus look at how much of all your available credit is borrowed as well how much you've used on each card." The article uses the example of purchasing a $2,000 TV on a card with a $2,500 limit; that's utilizing 80 percent of available credit, which doesn't do any favors for a consumer's credit score.

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