Credit Card Offers From Retailers Are No Bargain

We all know the drill: you’re at the store, ready to pay for your purchases when the associate at the register makes a tempting offer: would you like to open a store credit card right now, and get a discount on what you’re about to buy? Depending on your payment habits, your decision in that moment could wind up costing you hundreds of dollars in interest payments, judging from data in a new CreditCards.com survey.

The survey examines the store credit cards offered by 36 of the top retailers in the country, and found their average annual percentage rate (APR) to be 23.23 percent. Not only is that rate 2 percent higher than it was in 2010 (the last time CreditCards.com conducted the survey), but it’s 8 percent higher than the national average credit card APR of 15.03 percent.

That’s a “significant difference” in interest rates, said CreditCards.com senior industry analyst Matt Schulz, and it can add up over time. If you pay off your balance every month, then not to worry about accruing interest. But if you’re late with payments, or roll the balance over month after month, “then the math starts to not work in your favor, and it’s much less of a good deal,” Schulz told the International Business Times. The interest fees could far outweigh any discounts or rewards that come with the card.

Want to see the math? To take an example from CreditCards.com, say you made a $1,000 purchase, and paid only the minimum on your balance each month. Here's how much interest you would rack up -- and how many months it would take to pay the balance in full -- using the average retail credit card (23.23 percent APR), the average credit card (15.03 percent APR), and the average low-interest credit card (10.37 percent APR; typically reserved for consumers with very good credit histories):

Schulz’s advice: don’t sign up for a retail credit card on impulse, when you feel pressure at the counter. The best thing you could do is wait, and take home a brochure, or research the credit card offer online.

“The next time you go back to that store, you could make a more informed decision on whether the card is a good choice for you,” Schulz says. “Because chances are, all of those incentives will be there the next time you go.”

Schulz’s advice: Don’t sign up for a retail credit card on impulse, when you feel pressure at the counter. The best thing you could do is wait, and take home a brochure, or research the credit card offer online.

“The next time you go back to that store, you could make a more informed decision on whether the card is a good choice for you,” Schulz says. “Because chances are, all of those incentives will be there the next time you go.”