Personal debt is a rising concern in the US, and lack of consumer awareness may be a significant factor.

A recent study conducted by Comparecards has shown that nearly one in three Americans are considering obtaining a store credit card during this holiday season. However, from a personal finance standpoint, this may not be a wise choice.

Credit cards are a common method of payment, but they require responsible management. The typical APR (Annual Percentage Rate) on regular credit cards is approximately 20%, which is already substantial. On the other hand, store credit cards have an even higher APR. According to the same study by Comparecards, the average APR on store credit cards has increased from 24.97% to 25.41% this year. These high APRs can lead to significant financial trouble if you encounter difficulties making timely payments for any reason.

Although it’s known that credit cards have high APRs, there is another concerning trend among Americans seeking store credit cards. A significant number of individuals who previously signed up for retail credit cards did not fully understand the terms. About 15% were unaware that they were applying for a credit card. Among Americans earning less than $25,000 annually, this lack of understanding jumps to 22%.

Looking ahead, the financial implications of store credit cards are expected to become even more unfavorable. The current APRs on these cards are already steep and predicted to rise further. When applying for any type of payment card, it is crucial to carefully review the terms and pay close attention to the APR.