Posted by Elisabeth Leamy, Fri Oct 28 2016, 05:36PM

Since store-branded cards have record-high interest rates and standard cards are offering record sign-up incentives, the choice is clear for most

As we turn the corner into the holiday shopping season, says store-branded credit cards are charging the highest interest rates ever.  A record!  The website says the highest interest rate it found was at Big Lots, charging 29.99 percent interest on its credit card.  Next in line?  Zales, at 29.24 percent and Staples at 28.24 percent. says the average of all store credit card rates it analyzed was 23.84 percent.  Compare that to 15.22 percent for regular credit cards.  

It’s one more reason to think hard before opening store credit cards at all.   I’ve long advised readers of this column to resist the urge to sign up just for the 10 to 15 percent discount you often get. That discount often isn’t worth the ding to your credit score caused by the “hard inquiry” the store makes when issuing you the card.  Plus store cards usually have low limits and if you use yours actively, that will give you an unflattering “credit utilization ratio,” which also drags down your score.

The exceptions?  If you’re making a truly huge purchase —new appliances, a snowblower, that sort of thing— perhaps the discount is worth it, (but then you can consider closing the card afterward.)  Store cards can also be positive for people who are trying to build up their credit-worthiness, because they’re easier to get.  (Just be sure to pay them off in full each month for the maximum benefit to your score.)  There can also be a benefit to holding a store card if you shop at one store more than any other.  For example, Target’s card offers five percent cash back, whereas most regular credit cards offer no more than two percent cash back.

At the same time that store credit cards are charging their highest interest rates ever, regular credit cards are offering their biggest sign-up bonuses ever, according to another report, this one from  I found it striking, since I received the two reports just days apart.  WalletHub says regular credit cards are now offering a record of $101.48 in cash or 15,664 points to attract new customers.  The website says that is many times the amount of cash or points they were offering six years ago.  WalletHub also says the average annual credit card fee has been falling for five quarters in a row, and now stands at $16.42.

Put it all together and what does that spell?  If you’re shopping for a new credit card to use for your holiday shopping this year, it’s likely a regular card with a fat sign-up bonus will be a better deal than a store-branded card with a fat interest rate.