Interest rates on store credit cards have hit records highs, according to a new report from CreditCards.com. The average store credit card has an APR of 23.84%, more than 8% higher than the 15.22% average interest rate for all credit cards.
Consumers might think the sign-up bonuses stores offer to get them to sign on the bottom line balance out the steep interest rates, but usually, those benefits aren’t that impressive. Only half of credit cards offered by the 100 largest retailers in the United States come with sign-up bonuses. When bonuses are offered, they’re usually stingy. Only 13 cards have a bonus worth more than $25 for a $200 purchase, the report found.
Shoppers who are tempted to bite when a clerk asks them whether they’d like to apply to open a new card would probably be better off using a regular credit card with rewards, according to CreditCards.com
“With their outrageously high APRs, most consumers would be wise to steer clear of these cards unless they’re 100% certain they can pay their balance off every single month,” Matt Schulz, CreditCards.com’s senior industry analyst, said in a statement. “And even then, there are plenty of general-purpose credit cards with better sign-up bonuses.”
The sign-up bonuses and perks on airline-branded credit cards are especially attractive right now, a separate CreditCards.com report found. Cards like the CitiAAdvantage Platinum Select and the British Airways Visa Signature card have bonuses of 30,000 to 50,000 miles if you meet spending targets in the first months after you open a card. That’s enough to get you a free, round-trip ticket, which could be worth several hundred dollars, depending on where you fly.