Merchant Lines of Credit for Online Shopping

Online merchant lines of credit are lines of credit offered by online stores. These lines of credit can only be used exclusively at the online store from which they are offered. One example of such a line of credit is the Amazon store card. This card can only be used for Amazon store purchases. Online lines of credit may offer special financing terms during certain time periods, for certain products, or for a certain dollar amount spent at the online store. These lines of credit may have different repayment periods than a typical credit card or merchant credit card would have. For example, in some cases, payment in full must be made after a specified period of time, such as a promotional period of 6 or 12 months, whereas traditional credit cards and merchant credit cards allow borrowers to continue carrying over a rolling balance, with interest. In exchange for this shorter repayment period, the borrower may be offered low or zero percent interest, or an additional percentage discount off their purchase price.

An online merchant line of credit differs from a personal line of credit. Personal lines of credit are obtained directly from lending institutions. Borrowers apply for online merchant lines of credit at the merchant’s website. Funds from personal lines of credit can be used for anything the borrower wishes, while online lines of credit can only be used for purchases at the online store. Cash advances on online merchant lines of credit are not available and interest rates outside of special financing offers are comparable to the high range of interest rates charged on regular purchase credit cards.

Customers who shop very frequently at an online store may benefit from opening a line of credit from that vendor. Online merchant lines of credit typically offer special financing during certain times, such as at new account opening or during commercial blowout seasons, or for certain products. Typically, using an online merchant line of credit provides the borrower with a special discount only available to those using the line of credit. In other situations, the online merchant offers reward points for those using the store’s line of credit. The reward points accumulate and can be used as credit on future purchases from that merchant.

Borrowers should exercise caution when taking advantage of special financing terms in which payment must be made during a specified period of time for a zero or very low interest rate. Special financing offers might be 6 or 12 months for smaller purchases, and sometimes as long as 72 months for big ticket products. After the special financing period ends, a borrower may be subject to paying back interest on the purchase at the credit line’s normal interest rate – which is usually at the higher range of most purchase credit cards.

Online merchant lines of credit can be beneficial for consumers who can obtain a special discount for a planned purchase, and who are confidently able to pay off their credit within the promotional period. However, personal lines of credit offer greater flexibility since they may be used for purchases from more than one specific merchant. Before deciding which option to pursue, borrowers should assess their purchase intentions and their ability to abide to repayment obligations with any credit lender. Borrowers should understand the terms of any loan or line of credit before entering into such an agreement. Online merchant lines of credit and personal lines of credit are lending options that should be considered as short-term financial solutions and not part of a long-term financial planning strategy.

The content on this site is for informational purposes only and is not professional financial advice. Ladder Credit does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation.

*Not everyone will be approved

The line of credit account is designed as a short-term cash flow solution and not designed as a solution for longer term financial problems. Additional Fees may accrue if the outstanding principal balance is not paid at the end of the cycle. Credit counseling services are available to consumers who are experiencing financial problems.