According to a report by CNBC, the average annual percentage rate (APR) for retail credit cards has reached a record-high of 28.93%, up from 26.72% last year, as reported by Bankrate.

Experts have noted that while credit card rates have been on the rise in recent years, the rates on store cards have been particularly notable. Ted Rossman, a senior industry analyst at Bankrate, stated, "We've seen all types of credit card rates go up in recent years, but store cards have been increasingly notable."

The higher interest rates on retail credit cards could lead to increased financial strain for holiday shoppers who carry a balance. Carrying a balance on a card with an average interest rate near 30% could result in significantly higher costs for shoppers. Sara Rathner, a credit cards expert and writer at NerdWallet, warned, "With such high interest rates, these purchases could cost you more than double what they originally were when you first bought the item if you carry that debt for a long time."

Despite the concerns, a significant number of holiday shoppers still plan on using credit cards for their gift purchases this year. According to NerdWallet, approximately 74% of 2023 holiday shoppers intend to use credit cards for their holiday spending. However, experts suggest that consumers carefully consider the potential long-term effects of opening a retail credit card.

While retail credit cards can offer benefits such as discounts and early access to sales, experts advise against using them if you plan to carry a balance. Rathner emphasized the importance of considering the financial implications, stating, "Otherwise, shoppers may want to question what effects the transaction will have on their financial future."

One commonly seen promotion on retail credit cards is the "deferred interest" offer. This promotion allows cardholders a certain period of time to make payments with 0% interest. However, if they fail to pay off the full purchase amount within the designated time frame, they not only accumulate interest on the remaining balance but also retroactively incur interest on the original purchase price.

Experts caution consumers to be aware of the terms and conditions associated with deferred interest offers. Matt Schulz, chief credit analyst at LendingTree, highlighted the potential dangers, stating, "These 0% promos could be dangerous if you miss a payment or fail to pay the balance in full."

To make informed decisions about opening new lines of credit, consumers are advised to take their time and thoroughly research the credit card and its terms. Asking for brochures and researching online can help compare different offers to find the best option. Rathner advised against making impulsive decisions, especially during the busy holiday season.

With the high interest rates on retail credit cards, it is essential for consumers to carefully evaluate their financial situation and consider alternative payment options to avoid long-term debt. As holiday shopping ramps up, it is crucial for shoppers to prioritize financial stability and make informed decisions to protect their financial futures.