Credit cards

What to know before signing up for store credit cards

Before you fall in love with that discount at checkout, here are a few things to consider about in-store credit cards.

INDIANAPOLIS – It never fails. You place the order at a store and a clerk offers you a discount if you ask for their store credit card. But are the savings worth it?

Look at the different interest rates

Store credit cards often have a higher APR interest rate than a regular credit card. This means it’s more expensive to borrow money if you don’t pay in full.

Tedd Rossman of CreditCards.com said 29.99% was the highest they found.

“That’s what everyone offered, regardless of credit quality. So if you’re carrying a balance, that’s a huge rate. Stores like Big Lots, Discount Tires, Guitar Center, and Signet Cards Jewelers. It’s Kay, Zales and a few other brands,” Rossman said.

The lowest retail credit card APRs are the Amazon Secured Card at 10%, the Military Star Card at 10.24%, the Sears Home Improvement Account at 14.40%, and the Costco Anywhere Visa by Citi at 15, 24%, according to Rossman. He also added that these do not have credit ranges.

If it is a 0% interest rate, promotional introductory rate, search for the term “deferred interest”. Rossman said if you don’t pay off the balance before the time runs out, they can charge you interest on any interest that accrues.

“These 0% deferred interest promotions are particularly tricky because when a bank offers this, they’ll usually only charge you interest on what’s left over after the term. But a lot of these store cards will actually come back and charge retroactive interest,” Rossman said.

What else does the card offer?

Some stores may only give out rewards for their store, while others, like Amazon, give you a percentage on other things like gas. Also, consider how much you shop there.

“If you can pay in full and avoid interest, some retail cards can save you a lot of money, especially if you’re loyal to the store,” Rossman said.

I need time to pay something

If it’s time you need a big purchase like an engagement ring or tires, explore Buy Now, Pay Later programs. Some of them include Affirm, AfterPay or Klarna.

Customers choose a payment plan with a fixed interest rate, and depending on your credit, it could cost a lot less than in-store financing. The services tell you your payment, your interest rate, and how much that means in dollars.

David Yurman’s stores at Walmart offer these plans.

RELATED: Financing Everyday Purchases: Here’s How Buy Now, Pay Later Services Work

“I mean ideally I would say save a full paycheck, save your money to avoid any kind of interest. But that would definitely be more affordable ways to fund
something if you needed it,” Rossman said.

Overspending can lead to indebtedness, and indebtedness makes it even more expensive to borrow money.