DIGGING DEEPER: Are you Really Getting a Deal with Holiday Credit Card Sign ups?

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PEORIA, Ill. (WEEK) – The next time you head to the check out counter and make that big purchase you might want to think twice about signing up for a store credit card.
That’s according to a recent report by CreditCards.com, they find “94 million have impulsively signed up for a retail card at checkout,” but those cardholders are paying almost five percentage points higher, at 25.64 percent than the average credit card Annual Percentage Rate (APR) of 20.82 percent.

“It certainly can be appealing when you’re making large purchases at the holiday season to save 20, 40 percent,” said Jessica Tharp, President of the Central Illinois Better Business Bureau.

The group surveyed 100 of the largest retailers, of which 50 offer a store-only credit card along with 31 co-branded cards.

Now with Christmas only a week or so away the temptation to get those promotional offers at every corner can be enticing for shoppers to sign up.
Ted Rossman, an industry analyst with CreditCards.com points to some of the loopholes on those deals like deferred interest, that is, promising a of zero percent interest rate which is for a certain period of time.

“Usually they have higher interest rates and worse rewards,” said Rossman. “If you have anything left unpaid at the end of that term, the retailer is going to go back and hit you on the full amount at that gigantic interest rate.”

Some local shoppers admit they are spending above their means and feel the pressure to apply for a card at check out to relieve some financial burden, especially during the holiday season.
“They play on your sympathies, ya know?,” said Ray Cloud, local resident. “It’s Christmas time, you gotta take care of everybody.”
Industry experts say consumers should not make long-term commitment on the spot, but if you are considering opening up a new card they should read the terms and conditions.
“The terms and conditions that were disclosed at the time of offer maybe from the retail clerk, don’t exactly match what they signed on the pinpad.” Tharp said.
But there are scenarios where holiday signs ups are beneficial if the customer is loyal to specific store or brand.
“If you really love amazon or whole foods. Their credit card gives your 5% off everything you buy. Same thing like target, gap and anne taylor,” Rossman said.
Jeff Burnett

Jeff Burnett

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