Is it worth it to get a retail credit card?

You’re standing at the checkout counter at Kohl’s (or Walmart or Macy’s or Costco), and the cashier suggests that you sign up for a store credit card. “You’ll get 20% off today’s purchase,” she explains. “And there will be more rewards as you use it in the future.” Do you say yes?

If you do, you’re in good company. Almost half of Americans (45%) have signed up for a store credit card at some point, according to a recent survey by FinanceBuzz. But are store credit cards a good idea? That depends. Here are the basic facts about signing up for a retail credit card, as well as the ones that may be worth your while.

A retail credit card is a charge card that can only be used at one store or within a retailer chain. (For example, you can use your Gap credit card at Banana Republic, Athleta, Old Navy and Intermix.) The retailer partners with a bank to extend a line of credit specifically geared to that store.

The incentive for the store: You’re more likely to shop there if you have a card that might give you rewards and discounts. The incentive for you: rewards and discounts! In fact, the FinanceBuzz survey found that the most common reason people sign up is to save money on a big purchase. And more than half of the consumers surveyed reported that they did, in fact, spend more money at that retailer after signing up for the card.

But retail credit cards can be risky, too. The interest rates tend to be high (averaging 29.63%), and the survey found that one-fifth of card holders were more likely to carry a balance on retailer credit cards. In fact, 12% reported that they sometimes forgot to pay the balance because they rarely used the card. That can lead to late fees on top of high interest rates.

On the other hand, if you do pay off your balance quickly, you can save money with these cards. When WalletHub performed an analysis of over 1,500 store credit card offers, they found that the best offers could lead to a savings of 5% or more at stores where you do a lot of shopping. Here are some retail credit cards that might be worth your while.

Capital One Walmart Rewards Card

If you’re a regular Walmart shopper, using this card will save you 5% on Walmart.com purchases — and 5% on in-store purchases for one year (after that, it’s 2%). You’ll also get 2% off if you gas up at Murphy gas stations. There’s no annual fee, but paying it off quickly is crucial. The interest rate is
17.99% or 29.74% (variable).

Kohl’s Credit Card

If you’re about to buy an expensive appliance or piece of furniture, the Kohl’s credit card is especially enticing. You get 35% off your first purchase with the card. After that, you’ll get 7.5% back on every other purchase, plus other rewards (like occasional promotions of $10 off $50 and monthly free shipping opportunities). There’s no annual fee, but again, keep in mind that the interest rate is high. The regular APR is 30.74% (variable).

Best Buy Store Credit Card

Want to make a big electronics purchase? Sign up for a Best Buy credit card, and you’ll get 10% off your first day’s purchase (which you must make within 14 days of opening the account). That could knock a few hundred dollars off a high-definition smart TV. You’ll get 5% back on future purchases and pay no annual fee. Just keep the interest rate in mind. The regular APR is 31.24% (variable).

Amazon Store Card

With an Amazon credit card, you’ll get a $60 Amazon gift card and then earn 5% back on eligible future purchases. If you’re already an Amazon Prime member, you can earn even more: You’ll be upgraded to a Prime Card member, with rotating offers of an extra 5% to 15% back on certain products. The regular APR is 29.99% (variable).

Macy’s Store Credit Card

If you’ve ever shopped at Macy’s, chances are an associate has asked you if you’d like to sign up for a Macy’s card. And it’s not a bad option, as long as you pay off your balances quickly to avoid paying the interest rate, which is 31.74% (variable). When you sign up, you automatically get up to $100 off your first purchase, and 2% to 5% back on all future purchases. You’ll also get rewards from future promotions and free shipping.

Costco Anywhere Visa Card by Citi

Finally, a quick note about another type of store credit card — which is called a co-branded card. This is a regular credit card that can be used anywhere that takes that type of card, but it also has special rewards for a brand that partners with it. Among co-branded cards, one that might be worth looking into is the Costco Anywhere Visa Card by Citi.

There’s no annual fee for this credit card, but you do have to buy a Costco membership (which averages $60 per year). When you use this card at Costco, you’ll get 2% back on all purchases. But you can also use it to get 4% back on eligible gas, 3% back on restaurants and 1% back on all other purchases.