We all know those store-branded credit cards, which promise to give you access to the best offers, but how many of you know that they also attract high interest rates? Of course, there’s no need to panic, since they can still be worthwhile, if used properly.
Usually, retail credit cards, unlike other non-retail cards, charge significantly higher interest rates. Still, they also offer rewards, discounts or financing programs that other credit card products just can’t compete with, so they’re actually worth giving a shot.
Before you decide one, these are the most important aspects you should be aware of:
The average interest rate is 24.99%!
A bit scary, isn’t it? Also, some cards have even higher rates, reaching 30% and above. As a side note the average APR for the overall credit card market is just 16.15%.
And in order to make things even worse, the majority of retail credit cards have the same interest rate to all customers, no matter their creditworthiness!
There are still some pretty interesting perks!
A lot of retailers somehow find some great perks, which non-retail cards don’t usually have. To be more specific, we’re talking about introductory and/or ongoing discounts. Also, stores have various rewards programs, a lot of them being more generous than regular, non-retail credit cards’ offers. Yes, we’re talking about rewards credit cards, by the way!
Of course, we shouldn’t forget about the deferred-interest financing, offered by more than 40% of the retail credit cards. Sure, this isn’t exactly the same thing as 0% interest, but it’s definitely a valuable perk, especially considering that deferred-interest periods up to five years are something you see pretty often.
Ok, so it’s actually worth using a store credit card?
Due to these high interest rates we’re talking about, it’s basically not the best idea to rely on a retailer’s credit card for making purchases if you can’t pay off right away or before the deferred-interest period expires.
If you plan to carry some balance, it’s better to pick another credit card. On the other side, if you are able to pay off a balance in full or during the above-mentioned deferred interest period, using such retail cards can be a pretty good idea!
