Why it is not necessary to issue credit cards in stores

Many of them have high interest rates, according to a new survey.

Фото: Depositphotos

When shopping on holidays, the cashier can offer a discount on your purchase if you sign up for a credit card with a store logo.

Is it worth doing?

Ted Rossman, an industry analyst at CreditCards.com, does not advise doing this. Although the initial discount may be tempting, but if you do not pay your bill in full, the interest rate you will pay on average will be higher than that of regular credit cards.

CreditCards.com reviewed the 81 credit card at 58 stores in September and October as part of the annual survey. It was found that consumers who take cards only for stores face an average annual interest rate of 27,23 percent. This is well above the national average 20,82 percent for all credit cards.

According to the report on the website, one of the reasons why store credit cards have higher rates is that their applicants have a higher risk than other credit card issuers.

Kevin Morrison, senior retail banking analyst at Aite Group, says card stores often have a lower credit limit, so a higher rate helps them make money from these small balances.

While the 70 cards surveyed by CreditCards.com had an APR above 25 percent, the worst performance was found in six stores, including Big Lots, Zales Jewelers and Staples. Everyone had APR 29,99%.

Dillard's APR is as low as 11,99%, but rates can be as high as 26,99% depending on the consumer's credit score. At Kroger, rates ranged from 13,99% to 25,99%.

The best rate offered by the card, regardless of credit rating, was obtained from Military Star, a credit card that is intended not for one specific store or chain, but for various retailers who provide services to the military.

These stores include resort hotels, Internet sites such as myNavyExchange.com, and food courts run by the army and air force. You must be a member of the armed forces to be eligible for the card. The interest rate on the card is 12,24%.

Another card that offers a flat rate regardless of your credit score is the Visa card from Costco, which charges 17,24% on your balance.

Rossman says the best strategy is to go home and think about whether you should take the card or not.

Фото: Depositphotos

When should a store card be considered?

There are situations where you can get a store credit card. According to Rossman, if you are new to lending or recovering your credit rating, store credit cards can serve as a starting point for achieving these goals.

One of the reasons is that it will be easier for you to get a store card than a regular credit card. But you need to make sure you can pay your bills on time. Otherwise, strong performance can undermine these efforts.

If you often shop at the same store, it may be worth considering a card from this seller First, think about how likely it is that you will repay your debt every month. Next, consider the benefits and how often you need to shop with the seller to get the benefit.

If you are a loyal costco buyer, for example, you can consider his Visa card. The card charges a fixed APR of 17,24 percent and provides a return from 1 to 4 percent in cash on purchases made at Costco.

But if these circumstances do not apply to you, and you have a store credit card with a high interest rate, quickly pay off any balance or transfer the debt to a balance transfer card with an interest rate of zero percent.

Rossman then recommends that you remove the card released in the store to a safe place and no longer use it. Since most store cards do not have an annual fee, their storage is free if the balance is fully paid. If you cancel the card, it may temporarily lower your credit rating.

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