Shop wisely when it comes to store credit cards

Store credit cards may sound tempting with their discounts and loyalty incentives, but paying this way may not pay off.

A new report from CreditCards.com found that store-branded credit cards are charging record-high interest rates. The average store card charges 23.84 percent, much higher than the national average of 15.22 percent for all credit cards.

So before you sign up, here are a few things you should know:

DECIPHER THE DEALS: Retailers often lure consumers to these cards by offering a discount, access to special sales events and more. But be sure to read the fine print.

It may make sense to use one of these cards for a large purchase or if you are a regular shopper, but only if you can pay off the balance in full. Otherwise the cost of interest charged will far outweigh the benefit, said Matt Schulz, CreditCards.com's senior industry analyst.

Be wary of zero interest or "same as cash" intro periods, which can backfire without timely payments too. If a consumer doesn't pay off their balance in that introductory window, they could owe interest on the entire balance for the full period of time that had passed, not just on the outstanding amount.

"It can be a tempting thing because of those discounts," Schulz said. "Don't make the decision right then, take the brochure and read up and chances are all the perks will still be there but you'll make a more informed decision."

SIGN UP SMARTLY: Store credit cards may be a good choice for those who are just establishing their credit or are trying to rebuild it, says Schulz said. That's because these cards may be among their few options — standards to qualify for these cards can be a bit more relaxed.

A consumer could then use this card as a stepping stone to one with better terms.

However, Bruce McClary of the National Foundation for Credit Counseling warns that this can be a dangerous step for someone who is having trouble managing the cards they already have. It is far better for someone in that situation to reach out for help from a nonprofit credit counselor rather than get deeper into debt.

CONSIDER YOUR OPTIONS: If you want to make the most of your purchase, consider a traditional card that comes with its own perks.

There are a number of cards that offer cash back or other rewards that may rival or beat those of store cards. Chase's Freedom card, for example, is a no-fee card that offers $150 back after you spend $500 and at a lower interest rate than most store cards.