Is Home Depot credit card a scam?

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Is Home Depot credit card a scam?

Postby CreditCardGuru » Mon Nov 11, 2013 2:19 pm

Is the Home Depot card application the worst choice you could make? You will see a number of reviews which allege it’s a "scam" or "ripoff" but those complaints are an exaggeration, because the card is legal. But that doesn’t necessarily mean it’s a wise choice!

Home Depot card
The "no interest if paid in full" explained
This is not the same as the 0% you will find on major credit card offers. What Home Depot typically offers is this: No interest on purchases of $299 or more if paid in full within 6 months

What that means is that if you don't pay every single penny back before the 6 months, then on the original purchase price you're going to get charged the interest retroactively going back to day one! And that's at a rate of 17.99% - 26.99%. Worse yet, Home Depot's application states that fewer than half of applicants will qualify for a rate of less than 25.99%. So the odds are you will have a rate of at least 25.99%. Ouch!

Major credit cards do NOT charge interest retroactively on their 0% intro, which makes them a wiser choice.Let’s face it… home improvement isn’t cheap. Regardless of whether you shop at Home Depot, Lowes, or another store, there’s a good chance you will pony up some big bucks for whatever project you’re tackling. And obviously, that can be painful on the wallet, right? Stores like Home Depot play right into that pain, by offering you the “convenient” alternative of using their store credit card to pay. Their no interest offers may sound like a lifeline, until you actually understand how they work.

credit card application
As you see above, it says right there on the application how it works. Unfortunately many people don’t pay attention to this, nor do the customer service reps at the store always do a good job explaining it.
  • To avoid interest charges, you have to pay off the full amount by the promotional end date (in the above example, that’s 6 months).
  • If you don’t pay off the full amount within that timeframe, your Home Depot credit card account will be charged interest going back all the way to the date of purchase.
  • Worse yet, all of the APRs are excessive, so that will be costly. As I write this review the advertised rates are 17.99% - 26.99% APR, but next to that they say this…
interest rates

Major credit cards won’t do that
If you get a 0% offer from a Visa/MasterCard/Discover/AmEx, it won’t come with this deferred interest gimmick.

In other words, if you apply for a major bank card that offers 0% for 12 months, you will truly get 0% during that period, even if it takes you longer than that to pay it off.

This is why you should not apply for the Home Depot store. Instead you would be better off getting a regular bank card that comes with a 0% intro financing promotion.
  1. Chase Slate – Offers a nice 0% promotion and seems to be easier to qualify for than their other cards.
Rewards? Forget about it!
As if the financing offers weren’t disappointing enough, the Home Depot credit card doesn’t even offer a rewards program!

The best card for earning rewards at Home Depot stores is actually from Discover. Thru their ShopDiscover program, you can earn 5% cash back at
rewards program
So if you are a Discover cardmember and want to buy a fridge, faucets, doors, or anything else... just go to the Home Depot website through your Discover account and you will receive a full 5% cashback bonus on your purchases. Their website offers free in-store pickup, so you can buy online and then go pick it up at your local store.

Best of all, with the Discover it card (no annual fee) you can also save 5% in-store at home improvement stores during the quarter they are featured. To learn more, check out my Discover it review.

The 10% off promotion is extinct?
I remember a few years back, there used to be a promotion for the Home Depot card where you got 10% off the first purchase charged to the account. If you were spending thousands of dollars and had the ability to pay your bill in full, this was a fairly good deal as long as you were making a big ticket purchase.

Unfortunately I haven’t seen them offer in ages. It seems they stopped it a few years ago when the economy tanked and never brought it back since. I haven’t heard from anyone nor seen that 10% discount deal anywhere for several years now.

However as an alternative incentive, I have seen them tout a $25 statement credit for opening a new account. Being that many bank-issued cards offer more than that, I think most people would agree a $25 statement credit is a total joke. Not to mention, the last time I saw them offer that was several years ago.

Whether you’re after low interest rates or rewards, this is a rotten credit card all around. To add insult to injury, I hear the customer service is treacherous on it.

The only half-way logical reason I can think of for getting it is if your credit score is garbage and you need an easy to get credit card. If that’s the case, the Home Depot credit card requirements/qualifications aren’t too strict. But for anyone with average credit or above, you can do much better getting a card elsewhere.
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Postby Pete838 » Mon Nov 11, 2013 7:02 pm

I'm pretty sure the minimum payment change was a result of a change in federal laws. The intent of the law was to keep people that pay the minimum from being eternally in debt, but the result was that a lot of people that were already over-extended went into default when they couldn't make the new higher minimums.

My wife and I both had individual HD accounts when we did a home renovation a couple of years ago, and I always mailed the checks at the same time. One month I mailed one of them too early and it was credited to the previous month's bill rather than the bill I intended it to be credited to, and one of the accounts went into 'late' status and they jacked the interest rate from 0% to somewhere in the high 20%'s range. Then they flatly refused to to make a good will adjustment, reinstate the lower rate, or remove the late fee.

I mailed them a check for the balance and closed the wife's account. I still have the other one, but haven't used it.
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Postby just-me-in-tn » Mon Nov 11, 2013 10:34 pm

Of if you move and do a change of address the post office will send you 10% off coupons for Lowes and you can use them at Home Depot. The Discover card cash back 5% only applies to internet sales, not to sales from the store. The 6 mo SAC is a good deal on large purchases, though, when you plan to pay them off within that time frame. Another trick with Home Depot (and Lowes and Sears) - if you purchase online and schedule install, you pay tax. If you purchase in the store and they install, there is no tax.

Oh, and the 5% that Discover card offers on the More card - the Home Improvement category only lasts 2 months. And, there is a $500 cap on the purchases. So, if you go in and buy $1000 worth of merchandise, they will only give you 5% on the first $500 and then next $500 is at the 1% standard cash back bonus rate. No, you can't make two $500 purchases because the cap is for the duration of the promotion, not per purchase.

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Postby hematino » Tue Nov 12, 2013 1:43 am

just-me-in-tn wrote:Oh, and the 5% that Discover card offers on the More card - the Home Improvement category only lasts 2 months. And, there is a $500 cap on the purchases. So, if you go in and buy $1000 worth of merchandise, they will only give you 5% on the first $500 and then next $500 is at the 1% standard cash back bonus rate. No, you can't make two $500 purchases because the cap is for the duration of the promotion, not per purchase.

This is incorrect. The OP was referring to purchasing through ShopDiscover, which has a list of different retailers that customers can earn 5%-20% cash back on at all times (provided the sale goes through the portal on ShopDiscover). This is definitely separate from the 5% rotating categories offered every 3 months. In fact, for 2012 Discover More doesn't even offer home improvement as one of those categories-- probably that is the Citi Dividend you are thinking of. Dividend cuts your 5% off after only $500 per quarter, where Discover gives you $1500 at 5% before you get cut, had Home Depot been one of the categories.
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Postby formerhdcardholder » Tue Nov 12, 2013 9:22 am

scam sounds appropriate.

Not a fan of Home Depot Consumer credit card at all. i have had their card since 2008. i have made large purchases and paid them off. i had a $4500 credit line. they chose to decrease that on their own accord and for zero reasons to $2500. so....... that was an ugly hit on my beautiful credit. i called them up, and they said they did that for in-activity. hmmmmmmm.... greedy jerks.

so, i said kindly put it back to where it was. they said they would but would have to inquire hard to my credit. BOO!!! i said aint happening. and i closed my account - happily. I refuse to be abused by creditors when i have not abused them. i am building a business, and my credit is important and vital to my growth. i doubt i will ever strp foot in there again. i have lowes. lowes is closer, and that is the reason i did not use hd much. pound sand home depot.

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Postby Calipso » Tue Nov 12, 2013 10:49 am

I don't think the card is a scam or a ripoff, it's just sub-prime.

I had a Home Depot Mastercard and store card for several years. They honestly didn't do much for me besides the gift card's I get as rewards. I wouldn't sign up for one now though. I got both of them when I was rebuilding credit.

Per usual, read the terms and conditions. If you don't pay in full during the promotional offer timetable, you're gonna be hosed.
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Postby CreditMaven » Tue Nov 12, 2013 12:08 pm

I have a Home Depot card with $10,000+ limit, and have used it for years. I own several investment/second homes, and use the card a few times a year (annual spring cleaning, update carpets/appliances when a tenant moves,etc), so each time I go to HD the bill is over $299. I have it set up on autobill pay for the minimum monthly payments, and take advantage of the 6 mo same as cash, then pay it off about a month before the six month period ends. It is a good way to track home improvement costs on one statement (compared to hunting each investment property expense on personal credit cards) and has worked great for me.

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Postby Rina » Tue Nov 12, 2013 12:35 pm

What I dislike about the Home Depot card is that I can't set up recurring payments on the site; each month I have to log in and schedule a payment. Major bummer, but I only put up with it because of the deferred payments, and yes, I'm aware of their sneaky little ways.

For example, you can pay your balance in full, but if you happen to charge something between that time and the date your cycle ends, it's a deadzone for which you can get hit with a minimum finance fee. There's no grace period! Of course, the $1.50 is inconsequential, but it's their lack of principle that bugs me.
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Postby consumer101 » Tue Jan 07, 2014 8:28 pm

had a Home Depot Credit Card. I usually paid off the balance every month. I once needed it when 2 major appliances died 1 day apart. I was working on paying down the balance. There was $300 balance and in the 12 years I had the card I was NEVER late, ALWAYS paid more than the minimum (at least a few hundred each month) and NEVER missed a payment . They sent me a notice that my APR was being boosted to 29.99% and I have excellent credit! I paid the balance in full canceled the card and never looked back.

If you are uncomfortable getting a card, DON'T. Trust that inner voice that is telling you "DON'T DO IT!"

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Postby cardcustomerservice » Wed Mar 04, 2015 2:28 pm

Bank credit cards with 0% no interest periods are apples to oranges with 0% deferred interest store credit cards. Sure, 15 month of no interest on a bank credit card (no deferred interest to worry about avoiding) sounds better, but once those 15 months are over, you will never have another opporuntity for 0% interest on that card again. You'd have to open a new card. With a store card and deferred interest promotions, you can get 0% deferred interest AGAIN and AGAIN for the life of the card. As long as you pay the item(s) off in time, you will still have paid no interest, and you can always have 0% interest again for your next purchase. If you do NOT pay it off in time, then yes it is a very bad thing because the higher interest rate of the store card will all bill to you for all those months you had the 0%. But this only happens if you do not pay it off as agreed.
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