Heading into holiday season, retail credit cards hit record high interest rates
PHOENIX (3TV/CBS 5) -- You pick out the perfect present, take it to the register, and then you get THE question. “Chances are, this holiday season, we’ll be offered a credit card at the checkout counter,” said Bankrate’s Ted Rossman.
Store cards are often easier to get. That means it’s riskier debt for companies, and they charge consumers for it. Now, retail credit cards have hit a new high, charging an average of almost 29% interest, according to a new Bankrate study. That’s compared to 26.72% last year, and 21% interest on the average general purpose credit card.
“The highest is 33.24%, so that’s on cards from Academy Sports and Outdoors, and also other retailers like Michaels and Good Sam. They’re all at that very high end,” Rossman said. The Burlington credit card is also at 33.24% and 16 other retail cards have rates above 32%, including HSN, Ross, and Wayfair. “Honestly, if you’re ever going to carry a balance, it’s probably not worth it,” Rossman said.
Still not convinced? Let’s do the math. “Let’s say you have $1,000 on a store card at the average rate of about 29%. Minimum payments keep you in debt for more than four years and charge about $750 in interest,” Rossman cautioned.
Here’s another thing to watch for when it comes to retail credit cards. “Deferred interest is a tactic a lot of stores use, where if you haven’t paid the whole amount by the time the clock expires, they go back and the charge you all of the interest that would have accumulated. We see that a lot on store cards,” Rossman said.
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