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Is it time to go back to school on store credit cards?

Consumer Reports says don't be fooled by a good deal

SAN ANTONIO – Back-to-school shopping can take a big bite out of the budget, so when stores offer a deep discount for opening a new credit card, it may be hard to resist. 

Consumer Reports did a little homework, and found some that fail to make the grade.

Betsy Helmuth said she can usually be found shopping this time of year. With a son in grade school and a daughter entering kindergarten, her list is long and pricey.

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"Per kid -- and I have two kids -- I would say it's $130 to $200," she said.  

So when a salesperson asked if she wanted to save 20 percent by opening up a store credit card, she thought about it.  

"When you are at the register and you're going to spend a lot of money that you already feel a little bit uncomfortable about and they tell you that there's a chance to get a deep discount -- it's very tempting," Helmuth said.

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Nikhil Hutheesing, money editor with Consumer Reports, said, however, store credit cards rarely rise to the head of the class. For one thing, the interest rate is often much higher – averaging about 24 percent.

Credit cards in general average around 15 percent.

Nutheesing also said applying for any new card can also temporarily lower your credit score.

"Every time an inquiry is made on your credit card account, it hurts it a little bit and while it may not seem like that much, it could be the difference between a good credit score and a bad credit score," Hutheesing said.

For someone who does open a new account, don't shut it down immediately because that can have a negative impact on a person’s credit score, as well.

"The best thing to do is put the card away and don't use it," Huthessing said.

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Hutheesing said for people looking to build their credit, store cards -- which can be easier to get approved -- could be a good way to get a foot in the door, especially if the customer shops there often. The card could unlock special discounts or earn points, but it is important to remember, with the high interest rate, to pay the bill in full.

"If you don't, it's going to undermine the whole purpose of getting the card in the first place," she said.

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