Interest rates surge, impacting who rely on store credit cards
Date
10/24/2023 3:36:48 AM
(MENAFN) As the holiday shopping season draws near, consumers face a daunting financial hurdle as interest rates continue to surge, significantly impacting those who rely on store credit cards for their purchases. According to Bankrate's recent Retail Cards Study, the average annual percentage rate (APR) on retail credit cards has reached an all-time high of 28.93 percent this year. This is a substantial increase from 2022, when the average APR was 26.72 percent, and even further from 2021 when it stood at 24.35 percent.
To put this into perspective, the national average APR for all credit cards currently hovers around 20.71 percent. The disparity between the average retail card APR and the national average is notable and highlights the financial burden that shoppers may face if they opt for store-specific credit cards. Among these cards, the Academy Sports + Outdoors Credit Card, the Burlington Credit Card, the Good Sam Rewards Credit Card, and the Michaels Credit Card are the most punitive, each carrying a staggering APR of 33.24 percent.
The issue doesn't end there, as 16 retail credit cards charge 32.24 percent to all cardholders who maintain balances. This includes well-known retail brands such as Jared, Kay Jewelers, Zales (owned by Signet Jewelers), QVC, Walgreens, Ross, Victoria's Secret, T.J. Maxx, and Wayfair, among others. These exorbitant interest rates can significantly increase the cost of purchases made using store cards, impacting consumers who are unable to pay off their balances in full.
It's worth noting that many retailers attempt to entice customers by offering point programs and member perks when using their store credit cards. However, as Ted Rossman, a senior industry analyst with Bankrate.com, points out, these benefits come at a high price. On average, store-only credit cards charge a substantial 30.24 percent APR, well above the national average for all credit cards at 20.71 percent.
Additionally, consumers need to be aware that merely opening a store card, even if it remains unused, can still impact their FICO credit score. This underscores the importance of considering the potential long-term consequences of store credit card usage, especially when faced with the current record-high APRs, as shoppers prepare for the upcoming holiday season.
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