Store credit cards are now charging interest of more than 33 percent, well exceeding the consumer credit industry’s generally recognized 30 percent ceiling.
The average retail credit card now charges a record-high interest rate of 28.93 percent, according to Bankrate. That is up from 26.72 percent in 2022 and 24.35 percent in 2021.
For traditional credit cards the figure is 21.19 percent.
‘We used to see 30 percent as the high end for retail credit card APRs,’ Ted Rossman, Bankrate senior industry analyst, said in a statement.
Some store credit cards, which can usually only be used at a particular store or chain of stores, now charge interest of more than 33 percent. Pictured is an assortment of credit cards and rewards cards
Traditional credit cards have an average interest rate of 21.19 percent, according to Bankrate
‘In fact, 29.99 percent was an artificial barrier that few dared to cross for psychological reasons, mostly. But the market has blown past that threshold given the Fed‘s aggressive series of interest rate hikes over the past year and a half.’
Despite those unprecedented hikes, the Federal Reserve on Wednesday announced that interest rates will remain at their current level of between 5.25 and 5.5 percent.
It marked the third time in seven policy meetings this year that the central bank has not raised rates, giving time to assess the impact of its drive to dampen inflation.
Retail credit cards are different from traditional cards, and can usually only be used at a particular store or chain of stores.
They may sound like a good deal when they are presented by the cashier as offering a one-time discount or perk, but traditional credit cards offered by banks and other financial institutions generally offer much better rates, according to Rossman.
And all of those cards have fixed rates, meaning people with good credit history will not be eligible for lower rates.
Also available are co-branded retail cards, which are backed by major card issuers like Visa or Mastercard.
According to Bankrate, the Coast to Coast Visa and the Good Sam Rewards Visa cards also charge some borrowers that 33.24 percent rate, but because they operate variable rates, those with higher credit may enjoy a lower rate of 22.24 percent.
Co-branded retail cards are backed by major car issuers like Visa or Mastercard but are also offered by a particular store or chain of stores
And another 16 retail credit cards, 13 store-only cards and 3 co-branded cards, charge all customers the a slightly lower but still high 32.24 percent rate for all customers.
Some of these cards include the Banter by Piercing Pagoda card, the HSN Credit Card, Ross Mastercard and the Wayfair Mastercard.
In contrast, retail cards with some of the lowest rates included Bass Pro Shops CLUB Card, 20.99 percent, the Amazon Secured Card, 10 percent, the Military Star Card, 15.49 percent and the Costco Anywhere Visa by Citi card, 20.49 percent.
The best rates on a retail credit card were from Amazon – 10 percent on its Amazon Secured Card.
