Getting that credit card at checkout can be hazard to your credit score

Most shoppers know the routine: It’s time to check out and the cashier (or website) offers a discount if you sign up for the store credit card.

The offer can be hard to refuse, but experts say some shoppers should do just that.

Sign-ups for retailer credit cards soar during the holidays. But the cards’ perks don’t always outweigh the downsides for everyone.

Retailer credit cards work in one of two ways.

Cards that can be used for purchases only at that chain, like Target or Macy’s, are known as “closedloop” cards.

“Open loop” cards, such as the Amazon Prime Rewards Visa or the Capital One Walmart Rewards card, can be used anywhere but tend to earn better perks at the named retailer.

Holidays are when Americans tend to shop the most, so it’s no surprise that sign-ups for credit cards jump at the end of the year.

Pros

A closed-loop card is easier to acquire than a traditional credit card. That’s good news for folks who are just starting to build, or rebuild, their credit.

The cards can save you significant money if you are making a large purchase. The discount and loyalty perks can also be a good thing if it’s a store you already shop at regularly.

Other benefits vary by card and include free shipping, early access to sales or more generous return policies.

There’s also a quick approval process, which is appealing in the rush of holiday shopping.

Cons

The most notable downside of store cards is interest rates.

The average interest rate on a retail card is about 26 percent, compared with 21 percent for a traditional credit card, according to Ted Rossman, industry analyst at Creditcards.com.

That’s just the midpoint of the range, which is based on creditworthiness, Rossman warns. Some branded cards easily run into the 30 percent range.

That’s no big deal if you pay your card off in full each month, but for people who carry a balance, it can be a big expense.

Also consider your credit score. Too many inquiries could lower your score slightly, and too much debt can drag it down. Additionally, store cards typically come with much lower credit limits.

Consumers predominantly sign up for these cards on impulse, but their financial impact is long-lasting.