Store credit cards — steer clear of this holiday shopping temptation

Many retailers offer shoppers their own store-branded credit cards, and they aggressively promote them around the holidays. They come with benefits such as special pricing or discounts for cardmembers, which makes them attractive to frequent customers.

Most also come with extremely high interest rates; rates that are much higher than bank-issued credit cards.

They can be tempting with instant in-store discounts for applying, but also can be traps.

“I know it sounds tempting, like, ‘Hey, do you want to save 10% on today’s purchase?’ A lot of the time that’s not worth it, either because you are paying an interest rate that exceeds the rewards, or maybe it is just not a store that you are going to shop at all that often,” said Ted Rossman, senior industry analyst at

Its research found the average store-only credit card charges 28.22%, while the average retail co-branded card charges 25.01%. Both are significantly higher than a year ago. found two dozen retail credit cards at big, well-known retailers, that charge 29.99%.

“These include stores like Kay Jewelers, Zales, TJMaxx, Wayfair and Dick’s Sporting Goods,” Rossman said.

In addition to instant in-store discounts and future deals for cardmembers, retailers also promote them as having a deferred interest rate, meaning no interest is charged for a set period of time.

“Deferred interest is a real ‘gotcha,’ because what this means is that if you don’t pay the full amount by the time the clock runs out, then they can go back and charge you retroactively for all of the interest that would’ve accumulated throughout the term,” said Rossman.

Store employees often receive commissions when shoppers sign up for cards, which contributes to their aggressive promotion. Approval is usually instantaneous, and store cards often approve consumers with lower credit scores.

Seven in 10 consumers who have applied for a store card have done so impulsively.

The impact of a 29.99% interest rate is harsh. If the shopper charged $1,000 and only made the minimum payments, the shopper would be in debt for 51 months, and pay $775 in interest on that $1,000 purchase.

The highest retail credit card APR found was the Kroger Rewards World Elite Mastercard, and cards offered by nine of Kroger’s affiliated brands, at 30.74%.

Its report said the higher interest rates have the potential of costing retail credit card holders about $1.6 billion in additional interest charges.

Read the full report

Jeff Clabaugh

Jeff Clabaugh has spent 20 years covering the Washington region's economy and financial markets for WTOP as part of a partnership with the Washington Business Journal, and officially joined the WTOP newsroom staff in January 2016.

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