Store cards offer a range of tantalising attractions to entice you to sign up from no annual fees and interest-free periods to free gift wrapping and special promotions.

But for the uninitiated or undisciplined, store cards and retail financing can lead to a debt trap with interest rates ranging from 17.5 to 27.5 per cent, which is 2 to 12 percentage points higher than the average credit card.

At any given time, about three-quarters of credit card holders are paying interest, the Australian Consumers Association (ACA) says.

"Most Australians are not as disciplined as they would like to be and, in most instances, consumers would be better off with a cheaper credit card," says Catherine Wolthuizen, finance policy officer at the ACA.

Experts urge particular caution with store cards, which can be expensive and carry hidden traps. Having said that, they often offer good perks, too.

What's on offer

David Jones's store card, which predates World War II, offers 12 months' or 18 months' interest-free on furniture, homewares, electrical, white goods and bedding, provided you spend more than $500. No deposit is required, but there is a $25 establishment fee and the interest rate is 21.9 per cent. Every month, there are about 15 offers for cardholders.

"Anyone who can get a credit card can get a DJs card," says Peter Helson, general manager, credit, David Jones. "They appeal to people who do a lot of shopping in the store or others who are attracted to interest-free promotions. In August, we did a four-year interest-free promotion and some people who weren't previously customers may have said that is a good deal."

Skander Malcolm, managing director of card solutions, GE Money, says GE has been transforming the Coles Myer card into the Coles Myer Source MasterCard, a dual card that provides the benefits of the old store card plus a credit card that can be used here and overseas. It is still considering how to manage those who retain the Coles Myer card.

"There are certain interest-free promotions that are only available on Source, such as 'buy now pay later' for 17 months interest-free at Megamart," he says. "We are also offering a loyalty program which links into Fly Buys."

Brushing aside criticism of high interest rates, Malcolm says about 80 per cent of people pay off their store cards within the interest-free period. Another misconception, he says, is that issuers backdate the amount of interest. GE's starts only from the end of the promotion period.

Wolthuizen urges caution with cards, such as the Harvey Norman Creditline card, which can act like a debit card against a line of credit. She says cash advances are the most expensive way of getting money.

"In terms of having access to credit, they are a very expensive option," Wolthuizen says. "But if consumers are very disciplined in the way they use credit and never pay interest and only ever shop at a particular group of retailers, there may be some benefits to these cards."

However, she says, the reality is they are a "good 5 per cent more expensive in interest rates", they generally can't be used beyond a limited range of retailers and the risks of getting in debt which face most credit users have more extensive consequences.

"Our advice to consumers is that there are cheaper, more flexible credit options available," she says.

Andrew Willink, managing director of research house Cannex, goes further: "I think they are overpriced and if I received an offer it would end up in the bin because there are cheaper credit options available."

Top tips from Cannex

* Store-originated credit is most useful for disciplined borrowers who will repay the full amount before the interest-free period expires.

* Shop around to make sure that the interest-free period is not being funded by an inflated cost price.

* If your card has ATM access, don't use it. There are cheaper ways to access cash as interest could be up to 27.5 per cent.

* Look for a card with the most interest-free days or one that doesn't charge an establishment fee.

Case Study

Experts say a store card is in safe hands when its owner is a prudent, disciplined shopper. Brett Jones fits this definition, enjoying all the benefits of his David Jones card without incurring heavyweight interest fees (currently 21.9 per cent).

A teacher of children with learning difficulties, Jones, 39, has just bought a dryer and washing machine on a three-year interest-free deal. He is meeting all his repayments.

"It's terrific for big purchases where there is something you are not prepared to pay off in the month as you have to with credit cards," he says. "It's not hard to set up. They do it on the spot. The card is free and DJs has only recently introduced a $25 establishment fee on interest-free purchases.