PHOENIX - We've all heard it when we're checking out at a store, a pitch that sounds something like this: "Do you want to sign up for our store credit card? You'll save 15 percent on your purchase today."
From 10 percent off to 15 percent off that day's purchase, the deals vary. But, are store-branded credit cards really worth the deal?
We checked out a few options and found more than a few drawbacks.
First, watch out for high interest rates. Many store-branded credit cards have almost double the rates of an average bank credit card. Consumer Reports says an average card from a bank comes with about a 14 percent interest rate. But, credit cards from specific stores often come with interest rates of 25 percent or higher.
You also need to protect your credit score when you're asked to sign up for a store's credit card.
The AARP warns that store credit cards usually have lower credit limits, so signing up for them can hurt your credit utilization rate. Plus, if you sign up for too many new cards at once, you'll see the results show up on your credit report – and they won't be good.
Stores like Apple , Best Buy , Home Depot , Lowe's and Amazon also offer cards with financing plans attached for big purchases, according to Consumer Reports. Most of them offer you up to a year of zero-percent interest rates on large purchases purchases over a certain amount if you sign up for the card.
These plans can be great if you need to pay off a big purchase in chunks, but Consumer Reports warns there's a catch. If you don't pay it off in time, you could be charged interest retroactively back to the date you bought the item.
There is an upside to store-branded cards, though. If you need to build your credit history, store-branded cards might be a good way to go. Approval is usually easier for these cards if your credit isn't great and, if you can pay off the card each month, you still get the store deals.