5 Store Credit Cards With the Best (and Worst) Rates

Source: Thinkstock

Source: Thinkstock

“Would you like to apply for a store credit card today and save 20 percent on your purchase?”

How many times have you heard that question? Fifty times, 100, maybe more? Store credit cards create brand loyalty and, of course, they offer the option to buy now, pay later. This credit comes with a large cost, though.

Store credit cards come with notoriously high APRs, higher than most regular Visas or MasterCards. Many of these cards only allow shopping at specific retailers and they cost a lot of money in terms of interest, yet people still opt to use them all the time. The private-label retail card market brought in $270 billion in revenue last year.

Creditcards.com just conducted a survey (which you can view here) examining card APRs from many of the largest retailers. The survey results indicate the average APR among these retailer cards is 23.23 percent, which is 8 percentage points higher than the average, general-purpose Visa or MasterCard. “The Aug. 7 average for new card offers is 15.03 percent, and low-rate cards average 10.37 percent,” says the survey analysis.

Although most shoppers are aware that a low APR is better than a high APR and that APR refers to interest, many consumers are unaware of the exact dollar impact APR has. According to data published by the National Financial Educators Council, 81 percent of college students underestimate the amount of time it takes to pay off a credit card balance by a large margin.

If you went out and spent $1,000 on your 23.23 APR store credit card, it would take you 73 months to pay that amount off if you made the minimum payment each month. You’d also incur $840 in interest charges. If you had a low-APR card, however, you’d be able to pay that amount off much sooner — in around 50 months — and your interest charges would total only $232, according to the Creditcards.com analysis.

Depending on the retailer, your rate could range anywhere between just under 10 percent to closer to 30 percent. Check out the retailers with the highest and lowest rates below.

Highest rates

  1. Zales: 28.99 percent
  2. Office Depot Personal Credit: 27.99 percent
  3. Staples Personal Account: 27.99 percent
  4. My Best Buy credit card: 25.24 to 27.99 percent
  5. My Best Buy preferred credit card: 25.24 to 27.99 percent

Lowest Rates

  1. OfficeMax Visa Signature Card: 9.99 to 23.99 percent
  2. Army Air Force Exchange Military Star card: 10.24 percent
  3. Nordstrom retail card: 10.9 to 22.9 percent
  4. Nordstrom Visa Signature Card: 10.9 to 22.9 percent
  5. Williams-Sonoma Visa Signature Card: 13.74 to 21.74 percent

In addition to the initial offer, rewards programs and bonuses also tempt consumers to apply for these cards. The survey discusses how rewards programs are becoming more and more complicated. A retailer may have different levels, or “tiers,” of rewards and perks, which makes the rewards programs tough to get a handle on.

If you do decide to sign up for a store card, thoroughly examine all of the fine print and pay off your card’s balance each month if possible. When you pay your balance in full each month, you don’t have to be too concerned about APR. Paying the minimum, however, can result in a serious dent in your wallet over the long term.

Certified credit counselor Jonathan Gideon sums it up well when he says in the survey analysis: “Once interest charges are applied toward the account, any potential rewards, bonuses or discounts earned could be quickly negated and you could end up paying much more in the end for the purchase. You don’t have to avoid the cards, just be careful.”

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