Retail credit cards now charge interest rates of more than 33 percent, well above the generally recognized cap of 30 percent in the consumer credit industry.
The average retail credit card now charges a record high interest rate of 28.93 percent Bank rate. That is an increase compared to 26.72 percent in 2022 and 24.35 percent in 2021.
For traditional credit cards, this figure is 21.19 percent.
“We used to consider 30 percent to be the highest percentage for retail credit card APRs,” said Ted Rossman, senior industry analyst at Bankrate, in a statement.
Some store credit cards, which can typically only be used at a specific store or chain, now charge interest rates of more than 33 percent. Pictured is an assortment of credit 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. But the market has passed that threshold, given the Fed’s aggressive series of rate hikes over the past year and a half.”
Despite these unprecedented rate hikes, the Federal Reserve announced on Wednesday that interest rates will remain at their current level of between 5.25 and 5.5 percent.
It was the third time in seven policy meetings this year that the central bank has not raised interest rates, giving time to assess the impact of its push to tame inflation.
Retail credit cards differ from traditional cards and can usually only be used at a specific store or chain.
They may sound like a good deal when presented by the cashier as 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 these cards have fixed rates, meaning people with a good credit history don’t qualify for lower rates.
Co-branded retail cards are also available, which are supported by major card issuers such as Visa or Mastercard.
According to Bankrate, the Coast to Coast Visa and Good Sam Rewards Visa cards also charge some borrowers a 33.24 percent rate, but because they charge variable rates, those with higher credit can get a lower rate of 22.24 percent to enjoy.
Co-branded retail cards are supported by major automotive issuers such as Visa or Mastercard, but are also offered by a particular store or retail chain
And another 16 retail credit cards, 13 store cards and 3 co-branded cards charge all customers a slightly lower but still high rate of 32.24 percent 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 include the 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 the Amazon Secured Card.