When Mykail James was 19 and working a holiday job at a retail stoee, she took out a store credit card with a $2,000 credit line. When her school break was over, she realized she could no longer afford the payments. After missing a few, she paid off the card only to find that her credit score had decreased dramatically, affecting her ability to access other types of credit. “I didn’t get an actual bank credit card until I was 21, just because of that fear,” said James, who is now a financial expert and creator of The Boujie Budgeter. “Because of how it impacted my credit and also made it harder for me to buy a car a couple of months later.” With holiday shopping season around the corner, experts recommend caution when your favorite store offers you a credit card. “If you’re offered one at the checkout counter, most of the time it makes sense to say no,” said Ted Rossman, senior industry analyst at Bankrate. According to the Federal Reserve, outstanding credit card balances reached $1.14 trillion as of August 2024, meaning credit card debt is increasingly a concern for millions of Americans. Bankrate found that the average store-only credit card has an average annual percentage rate of 30.45%, significantly higher than the average APR of 20.78% for all credit cards. The APR is how much interest you’ll be charged if you can’t pay your balance in full every month. Here are recommendations from experts when considering a store credit card: Don’t immediately say yes to a store credit card Store credit cards are usually offered at checkout, and they provide shoppers with a line of credit that incentivizes spending more on the store’s products. If not managed correctly, these credit cards can negatively impact your credit history. When offered a store credit card, Bruce McClary from the National Foundation for Credit Counseling recommends that you don’t say yes immediately. “Ask for something with all the details in writing that you can take with you and review for a later time,” McClary said. Oftentimes, store credit cards are tied with a promotion such as 0% interest for a year or a discount on your purchase. And while these might sound appealing, it’s best to not rush the decision while you’re at the counter. Understand the details of the agreement Before signing up for a store credit card, you must read the fine print, Rossman said, including how much interest will be charged if cards aren’t paid in full and any late or penalty fees. “A lot of times, these retail cards charge tremendously high interest rates,” Rossman said. Another thing to look out for is “deferred interest,” which is when credit cards offer a promotion such as 0% for 12 months but, if the customer doesn’t pay in full by the time the promotion expires, they are charged retroactively for all of the interest that accumulated during that time. Do your research If you’re looking to acquire a store credit card, McClary recommends that you do some research on the retailer. Looking at reviews online can help you identify if others have complaints about their store credit cards. Additionally, McClary recommends that you ask yourself these questions: — How often do you shop at the store? — Are you going to be […]