Always read the good print: Take these precautions before you sign up for a credit card in the store

When Mykail James was 19 and worked a vacation at Victoria’s Secret, she issued a credit card with a $ 2,000 credit line.

When her school leave was over, she realized she could no longer allow payments.

After losing some, she just paid the card to find out that her credit score was dramatically decreased, affecting her ability to access other types of credit.

“I haven’t received an actual bank credit card up to 21 years old, just because of that feeling,” said James, who is now a financial and creator of Boujie’s budget. “Because of the way it affected my credit and also harder for me to buy a car a few months later.”

With the holiday shopping season around the corner, experts recommend caution when your favorite store offers you a credit card.

“If you are offered one in the receipt counter, most of the time makes sense to say no,” said Ted Rossman, a senior industry analyst in banking.

According to the federal reserve, unpaid credit card balances reached $ 1.14 trillion since August 2024, meaning that credit card debt is increasingly a concern for millions of Americans.

Banking revealed that the average credit card in the store alone has an average annual rate of 30.45%, significantly higher than the average 20.78% April for all credit cards.

April is how much interest you will be charged if you can’t pay your balance in full every month.

Here are the recommendations from experts when considering a store credit card:

Don’t say immediately yes to a store credit card

Store credit cards are usually offered in crates, and they provide buyers with a loan line that stimulates more expenses for store products.

If not properly managed, these credit cards can adversely affect your credit history.

When offering a store credit card, Bruce McClary from the National Credit Counseling Foundation recommends not saying immediately.

“Look for something with all the written details you can take with you and review for a later time,” McClary said.

Often, store credit cards are linked to such a promotion as 0% interest for a year or a discount on your purchase.

And while these may sound attractive, it is best not to rush the decision while you are in the counter.

Understand the details of the agreement

Before signing on a credit card in the store, you must finally read the printed, Rossman said, including how much interest will be charged if the cards are not fully paid and any late or penalty fees.

“Many times, these retail cards charge extremely high interest rates,” Rossman said.

Another thing to see is “driven interest”, which is when credit cards offer such promotion as 0% for 12 months, but if the client does not pay completely by the time the promo expires, they are charged so retroactive for all the interest that is collected during that time.

So your research

If you are looking to buy a credit card in the store, McClary recommends doing some retail -related research. Watching online ratings can help you identify if others have complaints about their store credit cards.

Moreover, McClary recommends to ask yourself the following questions:

– How often do you buy in the store?

– Will you use enough card to benefit from the rewards and deductions that come with?

– Can you use another type of credit card?

– Can you afford to pay the card completely at the end of the month?

– How many credit cards do you have? Is it worth adding another loan line?

These questions will help you determine if a store credit card is suitable for you or if you will be better with another type of credit card.

Best Practices If you have a credit card in the store

If you decide that a store credit card is a good option, it is important to pay your card in full every month, McClary said.

Also a good practice is to spend only what you can afford to pay in a billing cycle, even if your credit line is higher.

“You want to keep yourself not to enter this cycle of unseen debt,” McClary said.

One tip to build healthy habits is to place specific parameters when using your store credit card, James said.

For example, using your store credit card only for purchase over $ 50.

In that way you can reduce the amount of money you speak on your credit card and it’s easy to keep track of your expenses.

Save credit cards as a way to build credit history

Store credit cards were once known as a means of building your credit story if you never had a credit card before.

This is because retail cards have less demand to receive approval.

However, in recent years there has been an impact of other credit cards that predict that people build their own credit history, McClary said.

If you are looking to build your credit score, McClary recommends you consider credit cards secure.

These cards are considered secure because the lender usually requires a deposit and the loan line is lower than other credit cards.

Once you have used secure credit cards and build your credit report, you can graduate on a traditional credit card.

Save credit cards vs. Buy now, pay later

Since purchasing now, the payment of subsequent services has become available, retail stores offer them customers along with store credit cards.

It is important to understand the changes.

Store credit cards function as traditional credit cards.

By filling in a request, you need a gentle investigation into your credit report and if you decide to get the credit card, this credit line will be reflected in your credit outcome.

Buy now, payment later services are not shown in your credit report and they are usually then a specific way and are not a rotating credit line.

“Companies like Poshirm, Afterpay and Clarna have been cutting into the market share of store credit cards because they film a similar kind of warm,” Rossman said.

Both with store credit cards and BNPL services, customers must carefully process to avoid excessive capture which can lead to large amounts of debt, he added.