Store Credit Cards Are Now a Worse Deal Than They Were Before

What's Hot


The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

How a Mexican Tariff Will Boost the Cost of 6 Common PurchasesFamily

This Free Software Brings Old Laptops Back to LifeMore

How to Protect Yourself From the ‘Can You Hear Me?’ Phone ScamFamily

Report: Walmart to Begin Selling CarsCars

Where to Sell Your Stuff for Top DollarAround The House

Is Your TV Tracking You? Here’s How to Tell — and Prevent ItAround The House

11 Staging Tips to Help You Get Top Dollar When Selling Your HomeAround The House

21 Restaurants Offering Free Food Right NowSaving Money

20 Simple Hacks to Make Your Stuff Last LongerAround The House

4 Car Insurers That Might Raise Rates Even When the Accident Wasn’t Your FaultCars

How to Invest If Trump Kills the ‘Fiduciary Rule’Grow

12 Surprising Ways to Wreck Your Credit ScoreBorrow

9 Secret Ways to Use Toothpaste That Will Make You SmileAround The House

The 2 Types of Music That Most Improve Dog BehaviorFamily

What you should know before you sign up for a credit card from your favorite retailer.

It can be tempting to sign up for a credit card at your favorite store, especially when you can save 15 percent on your entire purchase just for signing up. But beware: Retail credit cards often come with sky-high interest rates and a complicated reward system.

According to a new CreditCards.com report, the average APR on retail credit cards has increased by more than two percentage points since 2010 and now sits at 23.23 percent. That’s more than double the national average of low-interest credit cards (10.37 percent) and more than eight points higher than the national average for all credit cards (15.03 percent). CreditCards.com said:

High rates make a difference. A consumer who puts a $1,000 balance on the average retail credit card and makes only the minimum payments would need 73 months to pay off the balance and would incur $840 in interest fees. Someone who puts the same splurge on a card with the average low rate of 10.37 percent would pay just $232 in interest — and be out of debt 17 months sooner.

But retail credit cards can be a good fit for some consumers. USA Today said:

For those who pay off balances in full, retail cards with reward programs can make sense. The programs are on the rise. Of the retailers surveyed, about two-thirds offer introductory financing rates, instant rewards or both.

Nordstrom is one such retailer with a tiered rewards program. It offers $20 “Nordstrom Notes” to use at its stores, early access to sales, free alterations and special events, based on a cardholder’s purchases.

While tiered rewards programs are used to entice and reward cardholders, they can also be complex and difficult to understand, turning away the very consumers they’re meant to engage.

“Making the benefits of retail store credit cards simple and clear will be crucial for retailers as loyalty programs continue to develop, especially when consumers face higher-than-average interest rates,” CreditCards.com said.

Click here to compare interest rates and rewards for 36 major retailer credit cards.

So next time you’re checking out at your favorite store and the clerk asks if you want to save 20 percent by signing up for a store credit card, what should you do?

“Say ‘no, thanks,'” CreditCards.com senior industry analyst Matt Schulz told USA Today.

I have a handful of retail credit cards. I typically use them when I can get a discount simply for putting my purchase on the store card. So my balances are usually low, and I pay them off in no more than two months. In fact, sometimes I use the credit card, then immediately make a payment on the card at the store, paying off the balance within minutes.

Do you use store credit cards? Share your comments below or on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: 10 Purchases You Shouldn’t Make With a Credit Card

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,781 more deals!