The average rate at store-issued credit cards at the nation's largest retailers is now 23.23 percent, according to a recent survey by
Shoppers don't seem to care. Private-label retail cards accounted for about
"Unless you're a hardcore shopper or fan of one of these retail outlets and really take advantage of some of the rewards that are offered," says
With rates for borrowing money elsewhere near historic lows -- a 15-year fixed-rate mortgage averages about 3.25 percent nationally -- retail credit-card rates look more like an outtake from looser economic times. With the current economic market and restrictions of the Credit Card Act of 2009, retailers are turning to high-interest cards for revenue.
To attract more customers, says Schulz, retailers are making it easier to get a card.
"Sometimes they're the only card for a younger person who might just be getting started or somebody who's trying to rebuild their credit," says Schulz. "These are also instant-approval cards -- you apply and find out in a minute. A lot of times issuers and retailers view those types of approvals as more of a risk, so you would see the rates higher just to hedge against that risk"
Store-only cards, also known as private-label cards, often have the highest rates. So many consumers have chosen a general-purpose card instead that only 12 of 36 retailers surveyed by
Macy's card offers "Preferred," "Elite" and "Premier Elite" rewards based on spending amounts. More often, a retailer will issue a "co-branded" card through a bank or card network such as Visa or
The 27 cards of this type in the survey averaged a lower interest rate (21.63 percent APR) than the 32 in-store-only cards (24.48 percent).Thirteen retailers in the survey also offered rates adjusted for the applicant's creditworthiness. Rates for a
Retailer cards with the highest rates:
1.Zales (28.99 percent)
2.Office Depot Personal Credit (27.99)
3.Staples Personal Account (27.99)
Retailer cards with the lowest rates:
1.OfficeMax Visa Signature (9.99 to 23.99 percent)
3.Nordstrom retail card (10.99 to 22.90)
4.Nordstrom Visa Signature (10.90 to 22.90)
5.Williams-Sonoma Visa Signature (13.74 to 21.74).
Anyone who carries a balance should care about rates. Let's say you have a
If that same balance, with the same minimum monthly payment, were applied to a card charging 15 percent, it would take less than nine years to pay. Interest charges would drop to
Use a retailer card for the perks and pay of the balance each month. If you can't manage that, try a general-purpose card.
"It's the same, conceptually, as what people do with general-purpose cards and frequent-flyer miles," says Schulz. "If you pay your balance off [each month], you can end up getting a free trip to
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