Did you end up with a retail store credit card after all of your holiday shopping?
Despite their drawbacks, many consumers can’t resist them, especially when opening one gets you a big discount on your first purchase. But not paying that first purchase immediately off probably negates any benefit from that discount.
“It is incredibly important to understand that store credit cards also come with interest rates that are significantly higher than the average credit card. They can be 25% or even up to 30%,” CompareCards Chief Industry Analyst Matt Schulz told WTOP.
“So it’s a very dangerous game to play if you carry a balance.”
CompareCards said 37% of Americans applied for a store credit card this past holiday season, up from 28% the previous year. Just 28% of those who got a store credit card during the holidays expect to pay off their first purchase within a month.
Despite high interest rates and generally low credit limits, retailers aggressively market their own store cards.
“About 14% of those in our survey said they applied because they were pressured into it by the cashier. A lot of people make the mistake of not taking the time to look into what they’re applying for.” Schulz said.
CompareCards says 51% of millennials applied for one over the most recent holiday, as did 43% of Gen X, 57% of parents with kids under 18 and 45% of men.
