Retail credit cards offer deep discounts. But are their perks worth the pitfalls?

If your holiday list racks up a high tab, you may ask yourself a question at the checkout counter.

Is opening a retail credit card a good idea? 

The answer is – it depends.

“There are definitely pros and cons,'' says Jack Gillis,CEO of the Consumer Federation of America, a coalition of nonprofit consumer groups.

One big pro: You can get deep discounts on particular products at the store, and that saves money if you want an expensive dress or big-screen TV.

But there are some crucial cons. These cards generally come with "horrible" interest rates, Gillis warns. So the key is to pay off your bill every month or the discount you got will evaporate.

A person with a cell phone and credit card in hands.

A credit boost?

Consider the behavior of people who got the cards. Among customers who have applied for a retail-branded credit card, 68% say they did so impulsively when they were paying for their purchases, according to a study from, a personal finance advice website. 

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Shoppers are often tempted to open a retail card to get a discount on the purchases they've made that day, consumer experts say. But the average interest rate on a retail credit card is 24.35%, compared with 19.92% for their bank counterparts, according to Some store cards top out at interest rates of nearly 30%.

The upside is if you're looking to build your credit profile, a retail card can be helpful because they're usually easier to get than a general-purpose card.  

“If you pay them off regularly, it can really benefit your credit standing,'' Gillis says, adding that retail cards also don't typically charge annual fees.

A better way to track savings goals.

If you routinely shop at a store, having their card can lead to continuing savings.  

You can get rewards equal to 4% cash back when you buy groceries or gas with the Verizon Visa Card for instance, says Ted Rossman, senior industry analyst for The Key Rewards Visa card, meanwhile, gives users 5% cash back and complimentary standard shipping when they shop at Williams-Sonoma, Inc.

Retail cards can hurt more than help

Still, retail cards may present more pitfalls than perks, consumer experts say.

It's easy to hit their typically low credit limits. Credit scoring agencies ding consumers who max out their cards.  

That "hurts your ability to build a credit profile,'' Rossman says.

And if a retail card offers an initial period where you pay zero interest, you might still have to pay hefty fees when the introductory phase runs out.

"If you don’t pay the whole amount in full by the time the clock runs out, they can charge you retroactively for all the interest that would have accumulated from the beginning,'' Rossman says. By contrast, bank cards don't tend to charge deferred interest.

So shoppers tempted to open a retail credit card should proceed with caution.

“Retail credit cards can be good,'' Gillis says, "but only if you’re very careful about paying them off on time.''

Follow Charisse Jones on Twitter @charissejones