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So, you hit the stores for some holiday shopping and, sure enough, when you’re checking out at the register the sales associate offers you a discount – 5%, 10%, 15% — on your purchase in return for opening a store credit card. The same thing happens online. For example, you’re ready to check out on and you’re offered a one-time $20 gift card and a 5% discount off your purchases if you get their store card. These offers sounds enticing. But, are they a good deal for you? It depends. But you need to be informed.

Watch those interest rates

Beyond the appeal of that initial pitch, check the interest rates on the store’s card offer carefully. Don’t be shocked to see very high rates on revolving balances. Retail store cards are priced generally from 15% to 25%. Some department store cards are approaching 30% APR.

We find that many people do not pay off their credit card balance at the end of each month in order to avoid interest charges on their revolving balance. Instead of a store card, consider finding a low-interest, no-fee credit card if you expect to carry a balance on your card. Most local credit unions, like Day Air, offer low-interest-rate credit cards with no fees attached.

Rebuilding credit

With generally lower credit limits and less stringent lending standards, store cards can be easier to open than a general-purpose credit card. This can be appealing for borrowers who are building or rebuilding their credit, notes a recent article on CNN Money. But before you sign up, be aware of the other options available to you for establishing a credit history or rebuilding your credit when it’s been damaged.

If you are looking for a way to finance your holiday purchases at a low interest rate, or you’re trying to rebuild or repair your credit, your credit union can work with you to find you helpful solutions. And we’ll always do so in a way that serves your best interests. After all, your financial well-being is our mission!

If you want to learn more, contact us!

Abby Hall ǀ Consumer Loan Manager