In a recent survey by Credit.com, one in ten adults (31 percent) said they've felt "bullied" by a clerk trying to get them to open a store account during the holiday season. Almost half (49 percent) said they regret their decision to get that new card.
"You should never feel pressured to add a new credit card to your wallet," said Gerri Detweiler, director of consumer education at Credit.com. "You need to think about this before you go to the store, rather than when you're right there at the register. That way you can make a smart decision."
Applying for that store credit card could be a money-saving move or a terrible decision, based on your current financial situation and how you pay your bills.
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"You need to understand all the terms, and the potential collateral damage that you might cause yourself," said John Ulzheimer, credit expert at Credit Sesame. "If you're going to carry a balance on that new card for even a couple of months, you'll give back any sort of discount you received at the register—and then some—in the form of interest."
Store cards often provide special perks and rewards for valued customers, but they typically have sky-high interest rates – similar to what subprime borrowers are forced to pay—and low credit limits, at least at first.
CreditCards.com surveyed the market in August and found that the average credit card issued by America's largest retailers had an APR of 23 percent—that's about eight percentage points higher than the current national average for all credit cards.
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"If you have a thousand dollar balance on one of these cards with a 23 percent interest rate and you only make the minimum payment, you'll end up paying $840 worth of interest," said Matt Schulz, senior industry analyst at CreditCards.com. "And it will take you more than six years to pay off that balance."
There are several reasons why so many stores want you to have their card. Marshal Cohen, a nationally-respected retail analyst at The NDP Group, told TODAY these cards build customer loyalty and create a sizeable cash flow.
"A retailer can actually make good money on the interest," he said. "Remember, Americans aren't great at paying off their credit card balances."