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What's the Deal: Buyer beware store credit cards!

A store offers you 20% off in exchange for a quick credit card application. This might not sound too bad, but it's important to read the fine print before signing.

INDIANAPOLIS — It never fails. As customers check out at a store, a clerk will offer a discount if they apply for the store's credit card. But is it worth it? 

With holiday shopping here, people will likely be looking for ways to save a few bucks. So, 20% off in exchange for a quick credit card application might not sound so bad. 

However, before signing it's important to know what the fine print says.

First, the interest rate. 

Store credit cards generally have a higher APR interest rate than regular credit cards. This means it's more expensive to borrow money if you don't pay in full. 

13News did some digging and the highest APR we found was 29.99% — and on cards like this, there was no range. The 29.99% was what everyone was offered regardless of credit quality. For those that carry a balance, that's a huge interest rate to keep up with on cards like Big Lots, Discount Tires, Guitar Center, Kay, Zales and a few other brands. 

If it's a 0% introductory rate...

Be sure to look for the term "deferred interest." If you don't pay off the balance before the clock runs out, the business can charge you back interest on all the interest that would have accumulated. This can be really, really significant, especially on a big purchase.

Finally, ask yourself, "What else does the card offer?"

Some companies might only give out rewards for their store while others, like Amazon, give customers a percentage back on things like gas. 

What to do if you need time to pay back big purchases

If you need time to pay back big purchases like an engagement ring or tires, explore buy now, pay later programs. 

Some of these programs include Affirm, Afterpay or Klarna.

These programs allow customers to pick a payment plan with a fixed interest rate and depending on their credit, it could be a lot less than store financing. 

These services tell customers what their payment is, their interest rate, and how much that means in dollars. 

Remember, excess spending leads to debt and debt makes it even more expensive to borrow money in the future.

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