Holiday shoppers, those store credit cards may cost you

SAN ANTONIO – It’s tempting. You’re at the checkout counter, and the clerk offers a discount if you sign up for the store’s credit card.

There is reason to pause before signing up. The interest rates on some retail credit cards have soared past 30%.

“Don’t be swayed by that initial ten or 15% discount, because it’s not worth it if you’re only making a small purchase or if you’re going to carry a balance,” said Ted Rossman, senior analyst with Bankrate.com.

As holiday shoppers hit the stores, balances are already at near record highs. And with prices rising on so many goods, many shoppers may be leaning more on plastic.

While some cards have enticing perks, Rossman said store cards can be dangerous. They are easier to get, but they typically carry higher APRs.

“The interest rates can be real whoppers on store cards,” he said.

What’s a whopper?

The average credit card rate overall is now about 19%, a record. For retail-branded and store cards, that average is a record 26.72%.

Taking a look at some popular retailers, Dick’s Sporting Goods’ card’s APR goes as high as 29.99%.

Some have busted the 30% mark. Macy’s just increased its APR to 30.49%. Wayfair boosted its rate to 30.74%.

Something else to watch out for is deferred interest. Retailers often lure people with offers of 0% financing over a period of several months. But, if you don’t pay in full by the end of the promotional period, you’re charged interest retroactively, back to the point of purchase.

“Deferred interest is a gotcha for store cards,” Rossman said. “I think these really are best if you pay in full and are loyal to the store.”

Bottom line, store credit cards can have beneficial perks, but if you carry a balance, you can end up paying a lot more than you bargained for.

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