This article was updated June 24, 2018.

If you shop at Best Buy (NYSE:BBY) often, either in the company's stores or online, you've probably been offered to apply for a Best Buy credit card. The card comes in two varieties (Visa and store-specific), both of which offer generous rewards on Best Buy purchases but have above-average interest rates. Here's some information on the card, as well as some alternatives that may fit your lifestyle better.

What is the Best Buy credit card?

The Best Buy credit card is issued by Citi and comes in two varieties -- the My Best Buy® Credit Card, which is only good at Best Buy stores, and the My Best Buy® Visa® Card, which is accepted at any retailer that takes Visa.

Both cards have essentially the same benefits and costs, which I'll discuss in a minute. They also let cardholders take advantage of special financing offers and use exclusive features such as the new Best Buy Pay feature that streamlines the checkout process on Best Buy's website.

Man shopping for a TV.

Image source: Getty Images.

The rewards and perks are generous

For purchases at Best Buy, the cards' reward rate is among the best in the business. Cardholders get 5% back in rewards on in-store and online purchases, and those who qualify for Elite Plus status by meeting spending requirements get a bump to 6%.

The Visa card also earns 2% rewards on dining and groceries and 1% on all other purchases. In addition, Best Buy has been known to offer promotional reward periods. In full disclosure, I have a My Best Buy® Visa® card, and Best Buy regularly offers an even more generous 10% reward rate as a promotion.

The promotional financing is another perk. Best Buy offers promotional financing for purchase above certain thresholds, and this benefit alone can make the card worthwhile. When I bought my home theater a few years ago, Best Buy gave me 24 months of interest-free financing -- a longer term than any standard credit card currently offers. For smaller purchases, offers of six- or 12-month financing are common. As an example, Best Buy currently offers six-month interest-free financing on any purchase of $199 or more.

Two caveats related to the financing and rewards -- first, this isn't true 0% APR financing. It is deferred-interest financing, which means that as long as you pay the balance in full within the promotional period, you'll pay no interest. However, if you haven't paid it off by the end of the interest-free period, interest will be tacked on to your account retroactively to the purchase date.

It is also important to point out that while generous, the rewards accumulate in the form of Best Buy Rewards certificates and are not redeemable for cash or a statement credit, as is the case with standard rewards-based credit cards. In other words, your rewards are only redeemable toward Best Buy purchases.

Even so, the combination of financing offers and generous rewards can make the card a great deal, if you're shopping at Best Buy.

However, the costs can be rather high

The potential downside of the Best Buy credit card is its cost. The annual fee isn't the issue, for most people. The My Best Buy® Credit Card doesn't have one, and the Visa-branded card can have an annual fee of either $0 or $59, depending on the borrower's credit qualifications. Even if you get the annual fee, this means that if you spend at least $1,180 at Best Buy per year, the value of your rewards will exceed the fee.

However, like most store cards, interest is rather high, which is the main problem. As of this writing, both versions of the Best Buy credit card have a variable APR that's currently set at 25.99%. This is roughly 10 percentage points higher than the national average credit card interest rate, which is around 16%. So, if you don't pay off your purchases in full each month, your interest expense can easily offset the value you get from earning rewards.

This can be an especially big problem if you take advantage of an interest-free financing offer and fail to pay off the balance before the end of the promotional period. For example, let's say that you purchase a $3,000 home theater system and have 24-month interest-free financing, with a $50 minimum monthly payment. If you just make the minimum payments, not only will you still have a $1,800 balance on your purchase, but you'll have nearly $1,250 in deferred interest charges added to your 25th monthly bill.

So, who should get the card?

In a nutshell, the Best Buy credit card is appropriate for people who shop at Best Buy often, and who don't regularly carry a balance outside of a promotional deferred-interest period. For customers who fit this description, it's difficult to make the case against the card.

On the other hand, if you tend to carry a balance from month to month on your credit cards, aren't sure if you'll be able to pay off your purchases during the deferred-interest promotional period, or simply don't shop at Best Buy often, you might be better off with another card that is a better fit for carrying debt.

Matthew Frankel owns shares of Bank of America. The Motley Fool owns shares of and recommends Visa. The Motley Fool has a disclosure policy. The Motley Fool receives compensation from some advertisers who provide products and services that may be covered by our editorial team. It’s one way we make money. But know that our editorial integrity and transparency matters most and our ratings aren’t influenced by compensation. The statements above are The Motley Fool's alone and have not been provided or endorsed by bank advertisers. Review The Motley Fool’s ratings methodology to uncover how we pick the best credit cards.