June 22, 2024

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Retail credit card average interest rate nears 30%

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As the average interest rate on retail store credit cards near 30%, many holiday shoppers could be in for even more financial strain this year if they carry a balance.

The average annual percentage rate for merchant cards reached 28.93%, a new record high, up from 26.72% last year, according to new data from Bankrate.

“We’ve seen all types of credit card rates go up in recent years, but store cards have been increasingly notable,” said Ted Rossman, senior industry analyst at Bankrate.

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In the past, 29.99% interest rates were listed on credit cards of all kinds as so-called penalty rates, or the rate an issuer would charge a consumer who was late with payments, said Matt Schulz, chief credit analyst at LendingTree.

“It’s becoming way more common for many credit cards to have that as a possible standard rate,” Schulz told CNBC in a previous interview.

While retail store credit cards can be easier to qualify for, especially for those with lower credit scores or little credit history, experts say consumers should be careful when deciding to open such a high-rate line of credit.

When to avoid retail credit cards

Retail credit cards can help shoppers save money on purchases and gain early access to sales, which can be valuable benefits as long as you pay the card in full. However, you may want to avoid them if you’re going to carry a balance, warn experts. 

“With such high interest rates, these purchases could cost you more than double what they originally were when you first bought the item, if you carry that debt for a long time,” said Sara Rathner, credit cards expert and writer at NerdWallet.  

Holiday debt does have a way of sticking around. About 52% of Americans incurred credit card debt while holiday shopping last year, and as of mid…



2023-10-23 14:55:00

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