If you plan to do your holiday shopping with a merchant-sponsored credit card, you may be looking at higher costs if you carry a balance.
According to a Creditcards.com survey, retail credit card information services posted an annual percentage rate (APR) of 26.72% in November, up from 24.35% a year ago.
The latest number is a record that goes back to 2008, when Creditcards.com began tracking the data. Of course, general interest rates were higher before the 2008 financial crisis. So the APR was probably higher then as well.
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 co-branded retail card APR was 25.01 percent, up from 22.12 percent.
The retail card is sponsored by the store, but can also be used elsewhere. A store-only card can only be used at the issuing store. A co-branded card is sponsored by a bank or credit card company other than the retailer.
Highest, lowest APRS
The highest retail credit card APR of 30.74% is charged by the Speedy Rewards Mastercard, Kroger Rewards World Elite Mastercard and credit cards offered by nine Kroger affiliate brands.
There are 24 retail credit cards that charge all cardholders 29.99% on balances, and nearly 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 astronomical,” said Ted Rossman, senior industry analyst at CreditCards.com.
“If you put down $1,000 and only made 29.99% of the minimum payments, you’d be in debt for 51 months, paying a total of $775 in interest.”
The lowest retail credit card APRs come from Amazon Secured Card (10%), Military Star Card (13.99%) and Costco Anywhere Visa by Citi (18.24%). That last one doesn’t seem like much of a deal.
APR Range, Be Careful
Some cards have a range of APRs that depend on the creditworthiness of the cardholder. The Apple Card ranges from 13.99% to 24.99%, the Capital One Walmart Rewards Mastercard ranges from 17.99% to 26.99%, and the Home Depot Consumer Credit Card ranges from 17.99% to 26.99%.
“There’s a good chance you’ll be offered a retail credit card this season,” Rossman said. “Don’t be pressured to make a bad decision at the checkout.”
First, “any bonus will only be worth it if you pay your bills in full and avoid interest,” he said. “You’ll need to shop in-store frequently for the rewards to be worthwhile.
“In many cases it would be better to get a general purpose credit card instead. These usually offer more flexibility, generous rewards and better interest rate promotions.”