The 4 Worst Retail Credit Cards for This Holiday Season

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Retail credit cards can be more attractive this time of year: Store clerks dangle sign-up bonuses — like big discounts and free gift cards — just as shoppers are trying to find room in their budgets for holiday gifts.

This type of plastic does have its advantages, including added savings. But a retail credit card can also end up costing more money than it saves you.

The average annual percentage rate (APR) for retail credit cards is 24.97 percent, according to a recent analysis. Meanwhile, the average APR Americans pay on their credit cards is 16.46 percent.

This means that while some consumers should run for the hills when presented with retail credit card offers, others may see a net benefit from taking advantage of those offers. Whether a retail credit card will cause your budget more harm or good depends on your financial situation.

Are retail credit cards worth the risk?

The first factor you must consider when deciding whether to open a retail credit card account is whether you will be able to pay the balance in full every month.

If you can do that, you will avoid incurring any interest charges, which are one of the biggest drawbacks to this type of plastic. But if you’re unsure whether you will be able to pay every bill in full now and in the future, a retail credit card could very well cost you more in interest than it saves you through discounts.

Additionally, if you carry too high of a balance over from one month to the next, it could hurt your credit score. The amount of money you owe accounts for 30 percent of your FICO score.

For other ways in which getting a retail credit card can hurt your credit score — and other disadvantages of them — check out “Should You Get a Store Credit Card? It’s Tempting.”

That article also details four advantages of retail credit cards, including discounts:

“Not only do you receive an initial 10 to 20 percent discount when you sign up, you also may be in line for extra discounts all year long. Store credit card holders may be the first to receive special coupons or gain access to exclusive sales events as a reward for their loyalty.”

Some sign-up bonuses are even better than that, however. For example, if you are approved for the Amazon Prime Rewards Visa Signature Card, you will get a free $70 Amazon gift card on the spot.

The worst retail credit cards

While the average APR for retail credit cards hovers around 25 percent, the highest among them exceeds 30 percent, found.

The website reviewed credit cards from 50 of the largest U.S. retailers and found that those with the four with the highest APRs are:

  • BrandSource: 30.49 percent APR
  • Big Lots: 29.99 percent
  • Staples (Personal): 29.99 percent
  • Zales: 29.99 percent

Ten cards tied for the fifth-highest APR: 28.74 percent.

What has your experience been with store credit cards? Share it by commenting below or on Facebook.

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