Store credit cards, are they really worth it?

As you begin your holiday shopping, chances are you'll hear the offers from the clerks: "Do you want to save money by signing up for a store credit card?" Before you answer, beware.

Research the interest rates on department store and retailer cards. Some are now at record highs.

"They often entice you with good upfront things, but sometimes that's not the best option," financial adviser Kent Copeland said.

The card option may not be a good one if you carry a balance, especially on store-branded plastic.

A credit cards.com survey found store credit cards are charging record-high interest rates, an average of nearly 24 percent. 

"I've gotten hit with monstrous interest in the past, so I try to avoid it," said shopper Dan Dalcais.

When Dalcais bought a recliner, he passed on using the Big Lots credit card with its sky-high interest rate.

Big Lots topped the survey, charging nearly 30 percent interest, followed by Zales and Staples.

The cards with the lowest rates were Costco's anywhere Visa card at 15.49 percent and Dillards at 10.24 percent. But the rates can climb depending on your credit history.

Copeland says you better read the fine print.

"Maybe they've got a regular rate of 15, but if you miss a payment or are late on a payment, all of a sudden it jumps to 27 percent," he said.

Viewer Margarita Meza emailed consumer expert Amy Davis about her Macy's card statements after she noticed the department store was applying two separate interest rates to her balance. The statement showed 14.4 percent interest added to purchases made in a certain time period, and 22.9 percent to others. Macy's also applied the bulk of her payment to her most recent charges instead of knocking down the older debt first. 

Some retail credit cards can be a good deal. For instance, if it's a store where you shop frequently, you can rack up points or cash back, but only if you pay off your balance every month.

According to the banking industry, about half of all consumers carry a balance.


About the Author

Passionate consumer advocate, mom of 3, addicted to coffee, hairspray and pastries.

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