If you plan to shop for your vacation with a merchant-sponsored credit card, you may be charged a lot if you carry a balance.
Retail credit cards carried an average annual percentage 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 figures represent records dating back to 2008, when Creditcards.com began tracking the data. Of course, general interest rates were higher before the financial crisis of 2008. So the APR is likely higher as well.
General purpose credit cards had an 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 credit card with a branded APR reached 25.01%, up from 22.12%.
Retail cards are sponsored by a store, but can be used elsewhere. It can only be used at stores that issue the same card. Branded cards are sponsored by banks or credit card companies other than merchants.
The highest value of APRS
The highest APR retail credit cards at 30.74% are the Speedy Rewards Mastercard, the Kroger Rewards World Elite Mastercard and the credit cards offered by nine Kroger brands.
There are 24 retail credit cards that account for 29.99% of all cardholders with balance, and almost all of them are merchant-only cards, the report said.
These retailers include Big Lots, Dick’s Sporting Goods, Discount Tire, Jared, Kay Jewelers, TJX, Wayfair and Zales.
“From a consumer’s perspective, 29.99% is an astronomical rate,” said Ted Rossman, senior industry analyst at CreditCards.com.
“If you paid $1,000 and made the minimum payment at 29.99%, you would be in debt for 51 months and pay a total of $775.”
The lowest retail credit card APRs are from the Amazon Secured Card (10%), the Military Star Card (13.99%) and the Costco Anywhere Visa from Citi (18.24%). The latter seems less expensive.
APR Ranges, Be Careful
Some cards have different APRs that depend on the creditworthiness of the cardholder. The Apple Card has an average interest rate of 13.99% to 24.99%, the Capital One Walmart Rewards Mastercard has an average interest rate of 17.99% to 26.99% and the Home Depot Consumer Credit Card has an average interest rate 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 be forced to make a bad decision at the checkout counter.”
First, “any reward will be worth it if you can pay your bills in full and avoid interest,” he said. “You also need to shop at the store often enough to get the rewards to be worth it.
“In many cases, it’s better to get a general purpose credit card. These often offer more flexibility, generous rewards and better interest rate promotions. “