Why Retailers Love Store Credit

You can get a store credit card at just about any retailer. The standard question has left consumers with the often split-second choice of asking themselves at checkout: Should I open this credit card?

The short answer: Yes and No. Rewards can be high, but be weary of the high rates, hidden costs and low credit lines. For consumers worried about high interest rates, the answer is no, don’t get the card. Interest rates can be high, and they aren’t worth carrying a balance on.

“If you pay the balance off in full, if you’re able to use the card in different places, it could be worth it to open it, depending on the deals and rewards structure,” Bankrate credit card expert Jeanine Skowronski told Fox Business. “Although, I do feel like it’s easy to miss a payment with these.”

The national average for retail credit cards is 23.3 percent APR when it comes to the 36 largest retailers in the U.S., according to CreditCards.com’s 2014 retail card survey.

The market is getting bigger, the survey highlighted, as retailers are finding new options — including mobile apps, sale alerts and reward perks — that encourage consumers to keep that card active. Consumers must also factor in the other costs, Bob Hammer, Founder and CEO of the R.K. Hammer card consultancy told Fox Business.

“For those who do have low credit scores, it can be a big deal in terms of what it’ll do to your credit, to the cost of credit and to the APR you end up paying,” he said.

The benefits to most consumers are obvious — savings, rewards and loyalty program perks.  Hammer concludes with a piece of advice for consumers: “You want to look for a well-managed institution that has a card with awfully good benefits with it beyond just getting a new credit line for yourself.”