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Think “Regular” Credit Cards are Bad? Check Out What Store Credit Cards are Doing to You

We’ve never been entirely against credit cards in this space. The fact is that regular, or general purpose, credit cards, if used carefully and strategically, can be marvelous tools to assist you in everything from enjoying an easier, more manageable vacation, to capitalizing on select rewards that essentially outsize the cost of the cards, to building your credit score.

However, we strongly remain against the use of credit cards if one is relying on them to enjoy goods and services that his income and/or savings would not otherwise permit him to indulge. Carrying a large amount of credit card debt, as you know, is typically very expensive.

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That said, it is not costing you nearly as much as is the debt from store-specific, or retail, credit cards. CNBC.com is reporting on an analysis done over at CreditCards.com that reveals retail credit cards are currently sporting an average annual interest rate of 23.84 percent, compared to an average rate of 15.22 percent for all cards.

The most expensive of the store cards? That would be Big Lots, with a whopping interest rate of 29.99 percent; yikes!

Something else that can make store cards a bad deal are the “no interest if you pay off the balance in X months” offer, a tactic frequently used by places like furniture stores to get you to come in and basically refurnish the house at one time. While the deals, on their face, are real, the problem is that your purchase can become mega-expensive if you are not, in fact, able to pay off the balance during the set period. Should that become the reality, stores typically have the right…courtesy of the contract terms located in the fine print of the credit agreement…to charge you their standard astronomically-high rate against the original balance, and to do so retroactively.

By Robert G. Yetman, Jr. Editor At Large

 

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