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The pros and cons of store credit cards

Is a store credit card worth it?

Nov. 19, 2018

If you've been shopping recently, you've probably had a sales clerk ask if you wanted to apply for a store card.

The incentives can be mighty enticing – an instant 20 percent or more off your purchase, plus special loyalty rewards.

On the other hand, the interest rates on store cards tend to be sky-high.

"The average APR for a store credit card is about 25 percent,” said Matt Schulz, chief industry analyst with CompareCards. “You don't have to be an accountant to understand that it doesn't make sense to pay 25 percent to save 20 percent."

That could explain why nearly half the people (47 percent) who've opened a store card, said they eventually regretted getting it, according to a recent survey by CompareCards.

“A lot of times when you get these cards, you're doing it in a pressure situation at checkout and you don't have a whole lot of time to decide or to look at details, and sometimes you end up making a decision that you regret,” Schulz said.

So, what do you do if this situation arises at the checkout counter?

If you’re offered a sizable discount on a significant purchase you’re about to make — and you know you can pay off the balance when the statement arrives — it may be worth applying for the card at the register.

If you plan to carry a balance, don’t even think about applying for that card. The interest will wipe away any savings.

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