Advantages of a store credit card

You know the drill — you’ve probably been offered a store credit card at checkout more times than you can count. They’re usually easier to get than a standard credit card, which is part of what makes them so tempting.

People with low credit scores or no credit history stand a better chance of being accepted, and the cards can offer a way to rebuild or establish credit.

Some of these cards might not have an annual fee tacked on either — although keep in mind that there are regular credit cards that don’t come with fees as well.

And with the holidays in full swing, you’re probably on the prowl for some good deals and discounts too. Another plus is that store-sponsored credit cards often come with special perks, such as early word on sales, cash back, coupons, a points-earning system or a 0% introductory APR.

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Disadvantages of a store credit card

While the Fed's rate hikes have triggered credit card interest rates to rise as well — this has been even worse for store credit cards, which have seen rates rise as high as 30% this year.

A recent CreditCards.com survey says the average interest on a new store credit card offer has reached a record high of 26.72%, up from 24.35% last year.

In comparison, the average interest rate on a standard credit card is at 22.4%.

If you carry a balance from month to month, you can expect to be hit with high interest costs.

And even if you’re able to benefit from a 0% introductory rate, the card issuer could charge you retroactively if you don’t pay your full balance before the promotion period ends.

Store credit cards also typically come with low credit limits, which can be an issue because high credit utilization can negatively affect your credit score.

It's widely recommended that you keep credit utilization below 30% to avoid hurting your score.

Finally, when you apply for a store card, the retailer might give you a quick approval but the bank backing the card might pull your credit to take a harder look. These inquiries can also ding your credit score.

More: Take a break from your debt this month with the help of Credible

Store credit card vs credit card

Credit card balances have jumped 15% from last year, representing the biggest year-over-year increase in over 20 years, reports the New York Fed.

With household debt hitting record highs and inflation sitting at 7.7% in October, adding a store credit card to the mix could come with more drawbacks than benefits.

There are two types of store credit cards. The retail-specific card is one you can only use for purchases at a particular store. The other type is a co-branded card that is partnered with a major issuer like a bank and can be used anywhere standard credit cards are accepted.

If you’re thinking of getting a store credit card that can only be used at one retailer, consider whether you’re a frequent shopper at that retailer first and if you’ll be able to make your payments in full each month to avoid racking up interest on your balance.

Other credit cards often offer purchase protection and extended warranty, and if they include an introductory 0% APR, they won’t pile up on deferred interest once the period ends.

On top of that, if you have a rewards credit card, you’ll be able to redeem your points more widely, instead of just at one particular retailer.

Make sure you do your research before accepting that store credit card offer and decide whether it’s the best option for you over the holidays.

You might not get any special perks or discounts, but you’ll be dealing with one less debt to pay off.

More: Compare rewards credit cards

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