You would think that with an average interest rate of 26%, holiday shoppers would avoid store credit cards.

That’s not the case right now, as more and more Americans are switching to store credit cards as the busy Christmas shopping season approaches.

According to a new Loan Tree Study, 35% of Americans say they are at least somewhat likely to ask for a store credit card during the holiday season. That’s up from 29% in 2021.

The 35% figure is somewhat surprising given that the average APR for new store cards is 26.60%, up from 24.27% a year ago. This is the highest rate level since LendingTree began tracking store credit card rates in 2018. It is also higher than the average interest rate for all new credit card offers, which amounts to 22.21%.

Additionally, as of November 3, the number of monitored Lending Tree store credit cards with interest rates of 29.99% has increased from eight in 2021 to 29 this year.

In-Store Credit Card Management Tips

Should these numbers give consumers pause before signing on the dotted line? Credit card experts think so.

“People tend to make bad decisions when rushed, and that’s certainly true when it comes to money,” said Matt Schulz, chief credit analyst at LendingTree. “If someone offers you a store credit card and you’re tempted, say no, ask for a brochure, then go home and learn more about the card.

If you’re still happy with the offer after doing your homework, apply the next time you visit that store.

“All the perks and discounts you love on the card will likely still be available, and you’ll make a more informed decision,” Schulz said.

It’s a good first step. Now, take these additional store credit card tips when considering a store credit card.

Know what a private card represents. Don’t get me wrong, store credit cards are different from major credit cards like Visa, MasterCard or American Express.

“Store credit cards, unlike major credit cards, are offered by a retailer and can only be used in that retailer’s store,” said Insurer CEO Brian Greenberg. “They are generally granted to customers who have poor credit ratings or who have no credit history. This means that they cannot be used anywhere other than at the specific outlet that issued them. »

The most common types of credit cards are those offered by major stores like Target and Walmart, but some gas stations and grocery chains also offer similar products.

“The other main difference between these types of cards is the amount of interest you’ll pay if you don’t make your payments on time,” Greenberg said. “Interest is generally higher for store cards than for large ones like Visa or MasterCard.”

Look at the big picture. Consumers view retail store cards as a short-term savings game during the holidays, especially with sign-up discounts of 10% to 20% off your entire first purchase and with exclusive rewards and cash on future purchases.

“Shoppers don’t think big when it comes to rewards, but rather how to save more in a single transaction,” said Andrea Woroch, personal finance expert, founder of AndreaWoroch.com financial advice website. “Rather than looking for quick savings, it’s important to think about your overall shopping habits and how you can maximize rewards for all purchases.”

A general purpose cash back credit card gives you more cash back on the kinds of purchases you make the most, Woroch noted. “It could actually help you earn more money compared to the instant cash back you get by opening and using a store card,” she said.

Compare the prices. Be sure to spend time reviewing the fine print on store credit cards, including fees, credit limit, credit score needed for approval, and rewards program to ensure that a card suits you.

“Look at credit cards by reward types like cash back, airline miles, and card points on sites like www.CardRates.com to find the best one for your holiday shopping needs,” Woroch said.

Know your shopping habits and use store credit accordingly. Overall, if you shop at Target or buy gas at the corner Shell station, compare your store card with your retail shopping habits.

For example, Greenberg likes the Amazon Prime Store card because he is a regular Amazon shopper.

“I love this card because it gives you 5% back on every purchase on Amazon with no minimum purchase requirement,” Greenberg noted. “The only downside is that you can’t use it anywhere else. But if you’re a frequent Amazon shopper, it’s a great way to save money.

Be smart with store credit cards

The best way to get the most out of your store card is to be smart about it.

“Make sure you use it for the things you really need, not just the things you want,” Greenberg advised. “Think about how much money you can reasonably pay back each month, and don’t just think about what you want and take out a store loan just because it’s easy.”

“It’s not a good financial strategy,” Greenberg added.