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News: A Retail Credit Card Is Not Always the Best Choice During the Holiday Season -

How many of us have impulsively opened a store credit card at a retailer's checkout counter just because it offered tempting instant savings? Many of us have at least one store credit card in their credit card portfolio, and that's not a surprise. Store credit cards can offer good savings when you treat them right and know about possible consequences.

However, we encourage you to think twice this season before signing up for a retail store credit card. Retail credit cards usually charge higher than average interest rates on purchases. It's hardly possible to find a store card with APRs below 22 percent. And while it's true that many retail cards offer special financing with 0% interest, these offers are often limited to the purchase amount, and sometimes, to specific products.

More than that, store credit cards do not usually offer real zero interest, but deferred interest. That means, if you fail to pay the card balance in full by the end of the promotional period, the interest will apply retroactively all the way back to the first day of the purchase. Thus, you may end up paying more for your holiday shopping rather than saving.

Another thing to consider before accepting a store credit card is that savings can be offered in the form of discounts or points (which are basically the same discounts but in a different form). All the savings you get with a store credit card are usually applicable at that particular retailer or retail chain. You won't be able to spend earned rewards outside the retailer stores. That basically means one thing: no matter how much you save, you will still spend your money at that retailer.

Rather than chaining yourself to one retailer, look for more flexibility. General purpose credit cards are the ones that can give you that flexibility. They have more generous rewards with multiple ways to redeem earned rewards, have better interest rates, and can offer 0% intro APRs on purchases with real zero interest. Plus, many banks have special shopping portals where you can grab additional discounts or rewards.