Pros and cons of retail credit cards

If you're thinking of taking out a store credit card to take advantage of their discounts and deals, don't swipe so fast. A new survey found that the interest rates on retail cards are way higher than your average credit card.

Matt Schulz, senior industry analyst with, says the average store credit card has an interest rate of over 23%, compared to the average for all credit cards, which is about 15%.

Two cards in particular are the worst offenders. Schulz says Zales, the diamond store, has a 28.99% rate on its card, and Staples, the office supply store, has a rate of 27.99%.

Do the basic math, and it's easy to see how expensive it can be to have a card with an APR over 20%. If you have a $1,000 balance on an average retail credit card, and you only make the minimum monthly payment, you're looking at about 6 years to pay off that balance, plus a whopping $833 in interest. You're nearly doubling your initial $1,000 purchase.

Keep the same balance on an average Visa or MasterCard and you'll pay off that $1,000 in about 4.5 years, with $370 in fees.

But if you don't carry a balance, retail cards offer a lot of perks and can also be a great way to build good credit.

Retailers will often give cards to people who are just starting out or to someone who's rebuilding their credit more easily than the credit card companies.

And be sure to read the fine print when it comes to card perks. According to, those can change from year to year.

For example, this year, Gap increased the amount of money you have to spend to maintain Silver Card status from $800 to $1,000.

Walmart has reduced the gas discount on its card from 15 cents a gallon to 5 cents.

Nordstrom no longer offers its cardholders extra rewards for spending more. Everyone gets 2 points per dollar.

And since the Office Depot/OfficeMax merger, those companies now offer one card with 25.99% APR. That is lower than the 27.99% on the old Office Depot Card, but much higher than the 8.99% Office Max used to offer.