Harbor Freight sent out a newsletter today, introducing their new credit card.
Credit card? Yep, it looks like there’s a new Harbor Freight store card. There are some interesting perks for frequent shoppers.
First, you get 5% back on everything, in “Harbor Freight Money,” which is basically store credit certificates.
They also have 0% interest financing offers, involving equal monthly payments.
You get 6 months, 12 months, or 36 months of 0% interest financing, depending on the purchase amount.
Here’s an example of how this works:
A purchase of $300 (including tax) gives you 6 months of 0% interest, and requires equal monthly payments of $50.
They say that if you miss a payment, you might be charged a late fee, including interest on the late fee.
If you have other balances on your account, this monthly payment will be added to the minimum payment applicable to those balances.
These payments equal the total equal pay purchase amount divided by the number of months in the equal pay period, rounded up to the next whole dollar. These payments maybe higher than the payments that would be required if this was not an equal pay purchase.
Lastly, there’s a 10% discount on your ENTIRE FIRST PURCHASE, NO EXCLUSIONS. However, reading the fine print makes it clear that you get a 10% first purchase discount OR interest-free “equal pay option.” You have to choose.
Ouch, don’t look at the interest rate.
For new accounts: As of 6/1/2020 Variable Purchase APR is 25.99%. Minimum interest charge is $2. This APR will vary with the market based on the prime rate. Existing cardholders: See your credit card agreement terms.
At this time, there is no annual fee.
You can apply for the credit card in-store, and you can only use it in-store and NOT online, at least not yet.
Harbor Freight says that you can combine discounts: Use your Harbor Freight Money reward certificates with all other coupons & discounts.
The new Harbor Freight Tools credit card is issued by Synchrony Bank.
Note: I am NOT a financial professional. Anything said here should be construed as my opinion and NOT as any sort of advice. These are not recommendations, read at your own risk.
For comparison purposes, let’s look at Chase, a bank that issues VISA credit cards. One of their current public offers features:
- $200 bonus after you spend $500 in the first 3 months
- 5% back in grocery store purchases (excluding Target or Walmart) up to $12K spent in the first year
- Unlimited 1.5% cash back on all other purchases
- Low intro APR (quoted below)
- No annual fee
Chase Freedom Unlimited APR info:
0% intro APR for 15 months from account opening on purchases. After the intro period, a variable APR of 14.99%–23.74%.
There’s a whole page on Chase’s terms, and it says:
14.99% to 23.74%, based on your creditworthiness. These APRs will vary with the market based on the Prime Rate.
And looking at a public Citi Bank credit card offer:
Earn 15,000 bonus points after you spend $1,000 in purchases with your card within the first 3 months.
Purchase and Balance Transfer Rate:
0% Intro APR on purchases and balance transfers for 15 months; after that the variable APR will be 13.49% – 23.49%, based on your creditworthiness.
Harbor Freight’s APR is 25.99%.
I have a Synchrony Bank store card to somewhere else, and the APR is 29.99%. You can be sure that I pay that bill on time and in full any month I use it. I use that store card on occasion, and I have rules for its use, lest it become a trap that costs me more money than it saves.
Credit cards could be pitfalls if used irresponsibly.
I think that some Harbor Freight customers might benefit from a store card like this. However, there will also be customers that might end up paying more than if they had used a credit card with different payment terms.
In their email, Harbor Freight says:
The Harbor Freight Credit Card gives you even more value—a great way to purchase the tools and equipment you need and you get to choose the credit offer that’s best for you.
Store credit cards are not good values for everyone. Tread carefully.
Had to check on an item today, and saw the HF CC offer.
They must have underbid some other card issuers. Several stores that I used to have a store card with, who had one of the top 5 or 10 credit card issuers, have switched to sync in recent history … some with changes of terms and rewards, transition pains, website issues, … Not that we all don’t run into practical issues with other vendors, but it is has been meh on the consumer end.
5% back in store vouchers could be interesting … if you buy a lot from that store.
I happily carry the Lowes CC.
I used to have Home Depot CC, which I thought was worth it with 5% Lowes match, but when HD snuffed that, I saw no point in having their card. I shop at Lowes first, whenever and wherever I can.
Beyond that, I find it better to just have a generic cash back.
Terms, points, benefits, etc change too easily. For years we accumulated airmiles from one of the big ones. Then got when unbeknownst to us, terms changed and we lost a huge amount of airline points, during a lapse of activity due to being in a no service area for them.
I’m glad you said something about the HD card. I thought I was going crazy thinking it had a discount. Seems like they just have a measly signup bonus with no reason to keep the card after.
Not that I like Lowe’s that much, but since the did away with the 10% off coupons, their credit card is one of the few ways to get a discount. There is a business card that you can preload and get a 5% statement credit on. But that might require tying up too much money.
Makes sense for HF…they don’t have to pay credit card processing fees that can run up to 5 percent.
This is just HF growing up…
I for one don’t like the predatory loan business…the high interest rates and fine print are going to ruin some folks.
They’re not a bank. Why wouldn’t they pay merchant processing fees?
They will have to pay merchant fees, although they are probably reduced. The card is managed by Synchrony Bank, and they probably pay a bounty to Harbor Freight for every card opened. My guess would be somewhere in the $50-$75 range.
HF isn’t paying 5% card processing rates… almost no B&M store does, as all of those transactions are lower risk swiped/inserted cards and are run at the lowest rates because fraud/security issues are lowest for in-person card processing. HF also does huge volume of transactions and would have a very good negotiated rate.
Even for my business, we’re under 2% for processing fees for swiped/inserted cards.
I bet they have a big credit card display next to the Icon tool boxes. You can now make payments over there years. I think this will be a big deal to some people.
They’re going to screw you on interest though
Do you know how to zero interest works? If you make minimum payments for 35 months and pay it all off on payment 36, you pay exactly $0 in interest.
Been doing this with PayPal Credit for a decade.
You didn’t read the fine print and details – that is NOT how the HF card promotional financing works.
They use an equal payments system rather than a payoff date system. You have to pay 1/6th, 1/12th, or 1/36th of the balance each month based on the promotional finance period you received on the purchase.
If you make two promotional financing purchases the same day, $400 and $1000, you will owe ~$150 per month for the first six months and ~$83 per month during months 7 through 12 (assuming no other purchases are made during that 12-month period).
But if they truly want to go after tool-truck businesses like Snap-On, they are going to have to extend lines of credit to people. A zero interest credit card seems to take care of that.
I just feel badly for the lack of common sense financial acumen of so many “consumers”.
Working the consumer credit system to your advantage is fine. But that’s the minority of retail credit consumers by a number of studies I’ve read.
Notice the asterisks after the ‘perks’. There’s always a catch and you probably have to spend at leasst a few hundred dollars per month to earn that ‘Harbor Freight Money’.
Seems like this is squarely aimed at the less financially responsible, in order to make the bank money on interest and HF money on whatever kickback they get from the bank. Synchrony Bank seems to be a fairly predatory institution that issues these kind of cards for these kinds of stores and their customers.
Indeed, there will probably be something.
It is not spelled out that we know of yet, but that’s how a few other reward systems have been / become over time; where you need to hit a threshold to get a benefit, then a threshold of rewards points or dollars before you can use it or cash it … or they mail it to you when you renew your membership or card for the next year … or it is at a fixed time in the year for everybody.
Then maybe if you don’t use it in a certain time frame, it may expire.
Lots of bits of rules that can limit the companies benefits returned to consumers.
This means I have to decline signing up for this card every time I buy something at HF now…
/\ /\ /\ Yes, this /\ /\ /\
One of the handful of things I hate about going to HD.
Getting pitched for a CC by the relentless designated guy, who offers free siding, windows etc estimates … ( how many dozens of times do I have to say no to him???? ) and then by cashiers during the checkout.
If HD offers 5% off with a new HD card, I will get one again, until then … stop bugging me.
While I like Harbor Freight and shop there quite a bit, I shudder at the thought of owing money on something I bought there.
buy a tool, it breaks post warranty, throw it out, still make payments forever!
I have no interest in making a huge purchase at Harbor Freight, but if i was this doesn’t sound like a bad deal.
I have taken advantage of the 0% financing at Lowes or Home Depot when I’ve wanted to make a big ticket purchase there. It becomes an easy matter to schedule a monthly payment within the prescribed period (6 months or so).
Anything is better than paying off a revolving credit card at whatever their rate is 12-26% Even better is paying cash but in these hard economic times it’s probably good to retain that cash.
Credit card debt? I seem to be in the minority as my family has none – even though I use the cards almost exclusively for purchases, paying my phone bill etc.. I’ve heard that some credit card companies call folks who pay their bills in full “deadbeats”. I realize that credit cards are very convenient – but not paying your bill in full is like taking a high interest loan.
The bad news is that I read that US consumer debt is nearly $1 trillion – and that nearly half of Americans have some credit card debt – with an average of $5700 per household. The good news – if there is any with COVID – is that the virus seems to be a factor in credit card debt falling.
I was taught that I shouldn’t put something on a credit card that I can’t afford to buy with cash, with some exceptions allowed if need-be.
If someone is living paycheck to paycheck, or otherwise has a strict budget, and they all of a sudden need a new set of tires for their car, that’s a good use of credit.
Some (many) abuse credit, racking up high bills for items they aren’t sure how or when they’ll pay for it.
Everyone has different circumstances.
What I’m worried about is that some will drawn to the 10% no-exclusions discount, putting typically-excluded tool boxes or other products on the credit card right away. And if they can’t immediately pay it off in full when the first payment is due, those savings quickly dissolve in a few months due to the interest rate. 0% interest equal payments sounds good, but you can get better deals with other cards’ 0% interest introductory offers.
This credit card will be a good value for some users. But for many, it’ll be a better deal for Harbor Freight and the issuing bank.
The siren’s song of easy credit had caused many a poor soul to get in financial trouble. The truck tool guys would visit one of our locations time to time – perhaps when they were visiting local auto businesses.
When I was on site – they always seemed to pitch “fantastic tools on easy credit terms.” I’d chase them away – telling them that the business bought the tools – and that we had our own lines of credit for times we needed them.
Now to wait till they issue a recall on the credit card due to use of poor quality plastic or some such ^_-
Lately 2 of our cards have switched from plastic to metal for their material. It reminds me a bit of when I was growing up – shopping with my mom. Some of the department stores that she frequented had little steel plates with raised numbers and letters on them – that held her account information. The sales person would use it to emboss the bill for her to sign. Presumably the purchases would be accumulated into a monthly bill that my parents would pay. Our new metal card have no raised numbers – just an embedded chip
Looks like a tool to sell more Ikon boxes (and othe HF items) like I predicted. Snap-on, MAC and the rest do this. Makes sense HF is doing it too.
Its slightly different as HF is a credit card where Snap on etc. is a traditional loan with collateral.
Wonder if they will see an uptick in Ikon box sales? My local HF said they only sold one so far.
Apply in store only? Kinda silly…..
10% on top of other coupons for a first purchase is a good deal for big ticket
5% straight discount would have been preferred, like the synchronicity lowes store card does vs the harbor freight money that that you need to bring into the store to cash.
Lowes contractor card works as intended, I go there preferentially because of the discount even though I hate lowes.
I would echo a leading point in the article, that if you’re at all inclined to carry a balance, stay the heck away.
Credit card interest rates are astronomical these days, bordering on usury.
If you’re not the type to thoroughly review your bank and lender statements, stay with your checkbook.
Mike (the other one)
Horror FateL where payments last longer than the tools.
Did anyone else notice that the zero percent interest came at the expense of discounts? I purchased my Predator generator at $699 with a coupon, now it is $799 with “zero percent interest.” It is a shell game……I am very glad they started this promotion, I finally will break my habit of ever stepping foot in their stores again.
Tony R Hodge
If you pay off HF credit is six months then they do not jack the price up. Lets say I spend 300.00 for a air compressor then I use CC for it I pay 50 a month no 10% off because they have several ways to use it. so if yo have the money to buy it it outright and can pay 50.00 per month then I do not see why it is a bad deal.. I understand that huge interest can be charge in not paid in 6 months of equal payments but if yo had the money to pay cash you have money to pay in six months providing you do be a dumb ass and spend that money. YOU have to be smart enough to pay it off and not go past the 6 months equal payments. Or just pay for it and not have you cash on hand. ON hand does not mean you can use it for just anything it means you have it in available for dire emergency cases. Be smart not a dumb ass. Or as my father always said pay cash if you can and use credit if you have the money for a pay cash purchase and then pay it off before the time it is last due. Not as soon as yo get the first bill but before the last payment is due. double your payment amount if you can to pay it off sooner, they do not like it that way but they do not harm you for doing it,
What credit agency do they pull from?
They haven’t disclosed this, I don’t think.
I would like to apply for a Harbor freight Battle card, Can’t seem to find an application
As far as I am aware, you can only apply in-store; an associate should be able to give you an application.
Dont mess with TX
This card is completely Bogus, A complete joke I tried to buy the backhoe and they max out at a 2000 credit limit, no matter income or credit score, you cannot buy using their card, even add on using up to 5 gift cards that max out at 250$ (also a joke) still is not enough to be able to buy the damn thing.. call and talk to the credit department see if you can get a limit increase. Nope its hardlined. Its a waste of a day and a credit application. (I have a few Cards, always paid off, 825 credit score cannot get this done.) Sat on the line for 20 more minutes waiting for ‘customer service’ on the card company, and no one can answer the phone.
Was on the line with HF customer support, they even said ‘we have had problems with this alot lately’ So they know its an issue and nothing gets done. Typical corporate America BS. FAIL.
And the text on the website is totally misleading. get 10% off (350$)and no payments for 36 months for a purchase that big.. its all a marketing scam to get you to sign up for the card. when you get in to check out its one or the other, and im sure the 5% back in HF bucks does not even apply.. did not even get that far.
Stop fooling people and get a real credit company HF.
Roger Michael Rose
825 score? Get a credit card from a credit union pay 13 percent interest.
Dont mess with TX
They dont pull your credit.. they dont even look at it.
They simply hope you default and owe the obscene +23%.
I could not get above the 2K to make a substantial purchase, its a joke.
Charles L Ladson
I got a card from the Brookfield store and I have not got my card
That’s unfortunate. If they gave you any paperwork, I’m sure there’s a phone number for you to call.