For the millions of Americans getting ready for their holiday shopping and ticking gifts off their to-buy lists, it can be tempting to spend more than households can afford. In-store shopping can become even more dangerous when salespeople appear, offering discounts on purchases simply by opening a store-branded credit card account. It is vital not to easily be swayed by immediate savings, because high interest rates could cost you more than you bargained for.
Many store credit cards and others that come through the mailbox are laden with offers, discounts and other perks. Store cards have an average interest rate of 23 percent, however, higher than the average 15 percent of typical banking cards. Credit card industry expert Matt Schulz points out that this difference is substantial, saying, "The interest can override any discount if you can't pay it off."
There are some good deals to take advantage of, though. For instance, a $150 cash back bonus is provided on the Chase Freedom Card as long as shoppers spend $500 in the first three months. If people buying gifts know they'll reach this, it makes sense to open an account, take the $150 and then never use the card again. It's also wise to stay away from perks that can't be used. Someone without a car cannot benefit from 5 percent cash back at gas stations, for example. Learn more about the Chase Freedom Card in our review of the best rewards credit cards.
When Christmas shopping, it's easy to get caught in the moment. Before opening those store card accounts, however, make sure to read the fine print and make certain the benefits will outweigh the costs for you.
If you want more credit, check out MoneyTips' list of credit card offers.