But don't know anything about them

As the shopping season is fully here, Americans are going to be pulling out the plastic a lot more.

The problem is, they don’t know how much their credit cards are costing them.

Almost 45 percent of shoppers don’t know what kind of interest rate their store-branded credit cards have, and nearly two-thirds carry a balance on them regularly, according to a LendEDU survey. More than half of respondents say their store credit cards are necessary for their holiday shopping this year.

Store credit cards typically offer deferred interest with higher-than-normal interest rates. Deferred interest is when you pay on the original amount on your new card. While zero percent interest — or waived interest — means you’re paying on the interest after the promotional period ends (typically a year), deferred interest means you’re still paying interest on the original amount. This can add up. The LendEDU survey says that 45 percent of Americans don’t know the difference.

“During the holidays, many consumers spend whatever credit they have at their disposal, including store-branded cards,” LendEDU says. “After the holiday season, the lack of rewards and high APRs on these cards may leave consumers with some big regrets.”

Store-branded credit cards have enticing offers, which can leave shoppers to buy things that might not want or need just to get another deal. Oftentimes, it isn’t worth it. More than 41 percent of respondents to the survey say they have spent more money on their cards just to earn a reward offered by the store. More than one-quarter of respondents note that they have been hit with unexpected fees on their cards.

“Store cards are renowned for their high and unforgiving APRs,” LendEDU says. “Many come with deferred zero interest rate offers for a few months, but if the balance isn’t paid in full by the end, cardholders are on the hook for full interest charges.”

Despite falling into debt and sometimes further debt, more than half of respondents say they need their store credit cards to keep up with holiday expenses. Luckily nearly 75 percent of them say they pay off their holiday debt before the next season comes along.

For some shoppers, the Black Friday shopping weekend is merely the end of their holiday shopping, not the beginning. A lot of consumers have started shopping long before Thanksgiving and sometimes, as far back as Labor Day. Frequently, shoppers are making holiday purchases throughout the year when deals come up, rather than wait until the true holiday season is here.

Sadly, we’re still exceeding our holiday budgets — that is, if we are even keeping holiday budgets — because we don’t recognize true deals. Many times, shoppers see percentages off (rather than original and final prices), making purchases based on bad math.

Save yourself from holiday debt and skip store credit cards altogether. LendEDU says the rewards may sound enticing but aren’t worth it.

“Rewards on store credit cards are also often tailored towards in-store purchases and offer very little in cash back elsewhere,” the survey says. “Furthermore, unlucky consumers often find that these rewards expire before they can put them to use.”

Meet the Author

Dori Zinn

Dori Zinn


Zinn is a freelance journalist based in Fort Lauderdale, Florida.

Budgeting & Saving, Credit & Debt

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Article last modified on December 18, 2017 Published by Debt.com, LLC . Mobile users may also access the AMP Version: A Lot of Americans have Store-Branded Credit Cards - AMP.