The holiday shopping season continues, and that means an increase in credit card use and retail credit cards.
KX News spoke with an industry expert with Credit Card Insider, who says in the company’s annual survey, they found that 41% of retail store card-holders regretted applying for one.
The danger is that retail cards typically have a 25 to 35% APR, or interest rate, versus 15% with your average credit card.
If you know you’re going to pay the card’s balance off every month, a high APR won’t affect you at all. But the Senior Credit Card Industry Analyst tells us deferred interest is also pretty common with retail cards, meaning there’s an introductory period where you’ll pay no interest, but as soon as that ends, you owe big. More than a quarter of those surveyed didn’t know this.
“Let’s say, again going back, you paid a $500 charge. If there’s a dollar left at the end of that — let’s say a year, that the deferred interest period was — you’re actually going to get charged the interest of that full $500 and not what’s left. And that’s what the deferred interest difference is,” explained Analyst Nathan Grant.
“But you want to read the fine print so you’re not regretting it down the line and going, ‘If I would’ve known’… because literally, you could have a dollar left and it would still translate to that full interest charge.”
He says retail credit cards do have positives, sometimes including cashback and discounts at those businesses. But he added, signing up for any credit card should take some thought, and the checkout counter is probably not the best place to make that decision.