Money Fix: When is applying for a store credit card a good idea?

No doubt you’ll look for ways to save money when shopping this holiday season. However, that 15% off, or whatever the sales clerk offers to get you to sign up for a store credit card, may not be a great deal in the long run.

Yet, according to new research from CompareCards.com, nearly one in three people polled said they’re likely to apply for a store credit card during the holidays, up from nearly one in four last year. This despite the fact that the average APR is 25.41 percent, up from 24.97 percent in 2018.

Walk away from the deal

“The initial discount is normally not worth signing up for a card, especially if you will need several months to pay it off,” says Kelly Figueroa, a counselor with GreenPath, a nonprofit organization in Garden City that provides financial counseling and education. Higher rates eat into discount benefits.

Leslie Tayne, a debt resolution attorney with the Tayne Law Group in Melville, says that, ideally, the time to take out a new credit card is not when you are feeling financially strapped. You should be able to handle the costs of the card, paying special attention to its high interest rate. Also know that opening a new credit card causes a hard inquiry on your credit report, which briefly and marginally affects your credit score.

When to consider signing up

 If you’re making a large purchase that would be significantly impacted by the discount and you are able to pay off the purchase right away, then it may be worth going for that retailer's credit card, says Tayne. Also, some retail cards, like Target's, offer a certain percentage off every purchase, making them attractive.

The card can fit well in your financial toolbox if you always pay the bill in full each month, says Brooklyn Lowery, a credit card expert for Cardratings.com. “Then the rewards and discounts offered can be worth it.”