BEFORE YOU SIGN UP FOR A STORE CREDIT CARD, KNOW WHAT YOU'RE GETTING INTO

When Mykail James was 19 and working a holiday job at Victoria’s Secret, she took out a store credit card with a $2,000 credit line.

When her school break was over, she realized she could no longer afford the payments. After missing a few, she paid off the card only to find that her credit score had decreased dramatically, affecting her ability to access other types of credit.

“I didn’t get an actual bank credit card until I was 21, just because of that fear,” said James, who is now a financial expert and creator of The Boujie Budgeter. “Because of how it impacted my credit and also made it harder for me to buy a car a couple of months later.”

With holiday shopping season around the corner, experts recommend caution when your favorite store offers you a credit card.

“If you’re offered one at the checkout counter, most of the time it makes sense to say no,” said Ted Rossman, senior industry analyst at Bankrate.

According to the Federal Reserve, outstanding credit card balances reached $1.14 trillion as of August 2024, meaning credit card debt is increasingly a concern for millions of Americans.

Bankrate found that the average store-only credit card has an average annual percentage rate of 30.45%, significantly higher than the average APR of 20.78% for all credit cards. The APR is how much interest you’ll be charged if you can’t pay your balance in full every month.

Here are recommendations from experts when considering a store credit card:

DON’T IMMEDIATELY SAY YES TO A STORE CREDIT CARD

This article is part of AP’s Be Well coverage, focusing on wellness, fitness, diet and mental health. Read more Be Well.

Store credit cards are usually offered at checkout, and they provide shoppers with a line of credit that incentivizes spending more on the store’s products. If not managed correctly, these credit cards can negatively impact your credit history.

When offered a store credit card, Bruce McClary from the National Foundation for Credit Counseling recommends that you don’t say yes immediately.