NEW YORK (MainStreet) — The offers from stores to obtain their credit cards often seem very enticing with retailers offering lucrative discounts on purchases, but the majority have hidden costs.

Retail credit cards often carry high interest rates, even up to 27%. While it may be tempting to apply for retail credit cards in order to chase special discounts, there is a risk that the high interest rates will erase any savings if the balance is not paid off quickly enough, said Bruce McClary, spokesman for the National Foundation for Credit Counseling, a Washington, D.C.-based non-profit organization.

“Most every retailer accepts bank-issued credit cards displaying the MasterCard and Visa logo, so the days of needing a different card for each store are long gone,” he said. “Many of the bank-issued cards have fixed interest rates that are way below what retail credit can provide.”

High Interest Rates Outweigh the Benefits

Even worse, some retail credit cards come with an interest rate that is the same for every customer, treating those with exceptional credit scores exactly the same as those who are below average, McClary said.

For years, patrons of Sears who were beloved fans of their tools and other products, held onto their retail card even though it charged every consumer 21% despite their credit score. While those days are long gone, the current rate is not much better even though the card is issued by Citibank, a reputable lender and not a subprime one which lends to consumers with below average credit scores. Nowadays, Sears offer three cards – both the Sears and Sears MasterCard cards offer a whopping APR of 25.24%. Only the store's “Home Improvement” account offers 14.40% or 18.40% based on creditworthiness.

“Before you pop the cork and break out the party hat, there’s some bad news,” he said. “The new rate makes 21% seem like a bargain, and it doesn’t appear that lower rates are available for those with excellent credit.”

If you are still gasping about the Sears interest rate, you won’t find any comfort at JC Penney who uses Synchrony Bank as their lender. Their financing terms are not any better with an interest rate of 26.99%.

“The thing about those interest rates is not the fact that they are so high, it’s that they are the same for everyone,” McClary said. “Those with excellent credit have no incentive to apply if they are going to be treated the same as someone at the other end of the spectrum.”

The lesson here is to refrain from using store credit cards, said Kevin Gallegos, vice president of the Phoenix operations for Freedom Financial Network, a consumer debt resolution company. Instead, pay with cash, use a debit card or a regular credit card. Or consumer could even consider layaway, which some stores still offer.

Gas Station-Branded Credit Cards Not a Good Option Either

Even gas station-branded credit cards are not a good deal, according to a report. These gas cards also have high interest rates with an average APR of 24%, far above the 15% for general-purpose cards.

The typical gas card offers a $0.10 discount per gallon, which is a decent return or about 4% at current gas prices. When gas prices rise, that percentage will decline.

Only a few gas cards offer sign-up bonuses and among those that do, they are rather paltry. A common one is a few extra cents off per gallon for the first 60 or 90 days. These cards contrast sharply with general purpose credit cards that offer lucrative sign-up bonuses that can be worth hundreds of dollars.

“Gas cards are the dull, boring sedans of the credit card world,” said Matt Schulz,’s senior industry analyst. “They’re stuck in the slow lane, destined never to be flashy.”

While all gas cards are not a bad option because they can help a consumer build credit history, serve as a short-term money-saving tool and offer instant approval, many other options give people more value. Other cards issued directly by banks and credit card companies offer better cashback rewards such as a 5% back on gas purchases this summer, a $100 sign-up bonus and no an annual fee from Chase Freedom, Schulz said.

Despite their short-comings credit cards issued by retailers remain very popular. The total number of new cards issued as of July 2014 is 21.7 million, a seven-year high and an increase of 2.7% from July of 2013, according to a November 2014 report issued by Equifax, one of the three credit bureaus. Consumers, especially ones with subprime debt, remain fans of these cards with the total limit of new credit originated in that same time is $41.3 billion, a six-year high and an increase of 2.7%.

There are signs that consumers are not paying down their retail debt. The total number of loans outstanding in September 2014 is more than $195 million, the highest level since January 2009 and the total outstanding balance is $59.6 billion, an increase of 6.7% from 2013.

--Written by Ellen Chang for MainStreet