Living with credit, Rewards, Shopping

Here’s why I don’t fear retail credit cards

John Egan

On Halloween, I was perusing a news story online that reported the findings of’s Retail Card Survey. Fittingly, the results of the study are spooky.

The study shows the average retail card APR is now 24.99 percent. Scary! Even more frightening: The APR for store-only cards is 26.38 percent.

As a personal finance writer, I’ve covered the pros and cons of retail credit cards before.

The pros:

  • Store cards are easier to get.
    For people with mediocre or poor credit scores, retail cards can be easier to obtain than traditional credit cards. Simply put, the issuers tend to be less strict about who qualifies for these cards than the major card issuers are.
  • Retail cards are a credit booster.
    If you’re trying to build or rebuild credit, a retail card can be a good way to raise your credit profile – as long as you use it responsibly, such as making on-time payments. Credit specialist Julie Marie McDonough, author of “How to Make Your Credit Score Soar,” refers to retail cards as the “training wheels” of credit.
  • Discounts and special offers for cardholders.
    A retail card can give you access to store discounts, loyalty rewards and APR deals. For instance, I’ve used my Best Buy card a few times to snag six- or 12-month, no-interest specials for major purchases.

The cons:

  • Store cards have high APRs.
    The No. 1 problem with retail cards, as the study indicates, is the hefty interest rates. If you carry a balance from month to month, those interest charges can devour your budget.
  • Discounts make signing up seem smart.
    Retail cards can encourage impulse buys, especially when the clerk ringing up your purchase tempts you with a 20 percent discount if you sign up on the spot – today! – for one of the store’s cards. If you’re a shopper who’d whip out a retail card at the first sight of a sale sign, then this type of card probably shouldn’t be in your wallet, regardless of how attractive the sign-up bonuses or other enticements are.

Weighing the pros and cons, I’m not at all averse to putting purchases on my retail cards, including the ones I have from Banana Republic, Best Buy, Crate & Barrel and West Elm.

Want to know why?

Because I almost always pay off the full balance every month, or I take advantage of a zero-interest offer that lets me pay off the balance over a period of months. Plus, I don’t use the retail cards all that often.

Now, if I were prone to racking up ungodly month-to-month balances on retail cards – as was the case in the past – then I would resist putting purchases on even one retail card. I may not be a math whiz, but I realize how quickly the interest can add up on one of those cards.

And once that interest piles up, it’s hard to crawl out from under your debt.

Embracing responsibility when it comes to your credit, regardless of what type of card you’ve got, can steer you away from financial trouble. So using a retail credit card need not be a terrifying thing, so long as you keep the ghost of credit card debt from haunting you.

See related: 4 reasons to say ’no’ to a store card offerStore credit cards: 6 ways to stay out of trouble, Retailer gone bankrupt? What cardholders should do

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