If you’re planning on doing your holiday shopping with a credit card sponsored by a retailer, you could be looking at hefty charges if you keep a balance.
Retail credit cards carried an average annual percentage interest rate (APR) of 26.72% in November, up from 24.35% a year ago, according to a survey by Creditcards.com, an information service.
The latest figure represents a record going back to 2008, when Creditcards.com began tracking the data. Of course, general interest rates were higher prior to the financial crisis of 2008. So the APRs were likely higher then too.
General-purpose credit cards had an average APR of 22.66% in November. The average store-only credit card had an APR of 28.22%, up from 25.77% last year. The average retail co-branded card APR stood at 25.01%, up from 22.12%.
A retail card is sponsored by a store, but can be used elsewhere too. A store-only card can be used only at the issuing store. A co-branded card is sponsored by a bank or credit card company in addition to the retailer.
Highest, Lowest APRS
The highest retail credit card APR of 30.74% is charged by the Speedy Rewards Mastercard, the Kroger Rewards World Elite Mastercard and credit cards offered by nine of Kroger’s affiliated brands.
There are 24 retail credit cards that charge 29.99% to all cardholders with balances, and almost all of them are store-only cards, the report said.
Those retailers include Big Lots, Dick's Sporting Goods, Discount Tire, Jared, Kay Jewelers, TJX, Wayfair and Zales.
“From a consumer perspective, 29.99% is an astronomical rate,” said Ted Rossman, senior industry analyst at CreditCards.com.
“If you charged $1,000 and only made minimum payments at 29.99%, you would be in debt for 51 months and would end up paying a total of $775 in interest.”
The lowest retail credit card APRs came from the Amazon Secured Card (10%), the Military Star Card (13.99%) and the Costco Anywhere Visa by Citi (18.24%). That last one doesn’t seem like much of a bargain.
APR Ranges, Be Careful
Some cards have a range of APRs that depend on a cardholder’s creditworthiness. Apple’s card has a range of 13.99% to 24.99%, the Capital One Walmart Rewards Mastercard has a range of 17.99% to 26.99% and the Home Depot Consumer Credit Card has a range of 17.99% to 26.99%.
“There’s a good chance you’ll be offered a retail credit card this holiday season,” Rossman added. “Don’t get pressured into making a bad decision at the checkout counter.”
First, “any rewards would only be worthwhile if you can pay your bills in full and avoid interest,” he said. “You also need to shop at the store pretty often for the rewards to be worth it.
“In many cases, it would be better to get a general-purpose credit card instead. These tend to offer more flexibility, more generous rewards, and better interest rate promotions.”
