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Holiday store-brand credit cards may not be a good deal

Ileana Garcia looks in her wallet for credit

Ileana Garcia looks in her wallet for credit cards in this file photo taken on March 7, 2009 in Kendall, Florida. Credit: Getty Images

With the shopping season underway, stores will try to tempt you into opening a credit card by offering 10 percent off your purchase. You're focused on getting deals on your holiday purchases, but this is no deal.

According to recent research from CreditCards.com, the average retailer's credit card charges a 23.43 percent interest rate, much higher than the national average of 15 percent for all credit cards.

If you can't pay your balance in full each month, store-branded credit cards are not ideal. "Don't do it," says Cary Carbonara, a certified financial planner in Huntington.

What you pay in interest will negate any savings.

"The financial damage they cause is not worth the 10 percent savings on that Christmas sweater," says Elle Kaplan, CEO of LexION Capital in Manhattan.

Read the fine print. Often, you must spend a certain amount to qualify for savings. "Be careful of what may be hidden in the fine print," warns Steve Repak, author of "6 Week Money Challenge: For Your Personal Finances."

Be mindful of your credit score. "If you open too many retail cards, this can hurt your credit score because of their high interest rates and low available credit balances," explains Leslie Tayne, a Melville attorney specializing in financial issues. Even if you make a large purchase and save $100 and you cut up your card, it will still be outstanding credit and count against your score, Carbonara says.

Play smart. Consumer expert Andrea Woroch of Bakersfield, California, says, "It's better to use a reward credit card from your bank that allows you to redeem rewards that benefit your budget, like miles or cash back."

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