You're shopping, you browse, you decide, and when you're ready to pay, you're offered a 15-percent discount, or $20 back right away, or free shipping. How? By applying for a store credit card. But Consumer Reports Money Adviser says you should resist the urge to immediately say yes.
"Some of the biggest stores like Bloomingdale's, Macy's and Sears charge around 25-percent interest on unpaid balances," said Greg Daugherty, a Consumer Reports Money Adviser columnist. "That's about twice the average you'd pay with a traditional bank credit card."
Carefully look over cash-back and rewards offers too. Walmart touts 1 percent cash back on all purchases. But in small type there's a big red flag: You have to spend $3,000 a year before you get the full 1 percent cash back.
But Consumer Reports did find stores whose cards offer very good cash-back terms.
At L.L. Bean you can get 3 percent back. The money comes in store coupons that you have a year to use.
Even better, Target's credit card gives 5 percent back right at the checkout.
"Stores like Target and Nordstrom offer a different kind of plastic: debit cards," said Daugherty. "These take money directly from your bank account. But if you overdraw you can be hit with hefty fees, so they're not for everybody."
But for big purchases, do consider another type of store card from electronics and home stores like Apple, Best Buy, Lowe's and Home Depot. These generally offer six months to a year financing with no interest for big-ticket items. But remember: You've got to pay the balance on time or you will be charged interest retroactively.
"Store cards can have both good and bad effects on your credit," said Daugherty. "They're generally easier to get than bank cards so they can help you build a credit history. But if you acquire too many at once, that can hurt your credit score."
The bottom line? Choose carefully and a store credit card can be a real perk.