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Are store credit cards ever a good idea?

The last time you went to the cash register of a local big-box retailer or clothing store, there's a very good chance that the store employee not only said hello and inquired as to whether you found everything, but also asked whether you would have any interest in opening a store credit card.

While you probably declined the offer without a second thought, the question naturally arises as to whether these store credit cards are ever a good deal for the consumer.

Like so many things in finance, the answer is that it depends.

A recently released report by the financial website CreditCards.com that examined 64 different credit cards offered by 42 retailers found that the average interest rate for the store credit cards was over 23 percent, roughly 8 percent higher than the average, genera-purpose credit card.

According to experts, the reason as to why interest rates are so much higher for store credit cards is relatively simple: risk.

Specifically, retailers are offering credit cards to a wider range of customers, some of whom may not have the best track record when it comes to managing their finances. As such, they need to offset some of this risk with higher interest rates.

This naturally begs the question as to why anyone would ever want to open a store credit card.

Experts indicate that the discounts offered by many of these store cards can actually can prove to be rather substantial over time. The only catch, however, is that the card balance needs to be paid off at the end of each month so as not to incur the high interest rates.

"If you never carry a balance, those 20 percent discounts that come with the card can lead to real savings," said one expert. "However, if you’re paying 25 percent interest to get that 20 percent discount, the math clearly doesn’t work in your favor."

Indeed, experts advise that anyone interested in store credit cards should always decline at the register, but take the accompanying literature home so they can read up on things like annual percentage rates, limitations on discounts/rewards and whether the card can be used anywhere else. This will allow them to make an informed decision.

Do you have a store credit card? If so, what has your experience been like?

It's important to remember that if credit card debt somehow becomes unmanageable that you do have options. Indeed, filing for personal bankruptcy may provide not just a lifeline, but a much-needed clean financial slate.

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