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.