The High Price of Signing Up for Retailer Credit Cards

October 10, 2019, 10:00 AM UTC

Frequent shoppers know the drill well: You’re at the counter of a retail store and the cashier pitches you on an attractive discount, provided you sign up for a store credit card.

But as alluring as that discount may sound, it can add up in interest payments during the following months if you don’t pay off the balance right away. The average annual percentage rate, or APR, on credit cards issued by retail chains has risen 37 basis points to just above 25%, according to an analysis from, an online credit-card marketplace.

That average rate for store-only cards is significantly higher than the average APR of 21.1% for all credit cards. And the increase in retail credit-card APRs came at a time when the benchmark prime lending rate—the rate at which banks lend to preferred customers—has declined 25 basis points year-over-year to 5% from 5.25%.

The report looked at 88 credit cards offered by the 100 largest U.S. retailers, and scoured their the terms and conditions for data on their APRs. The five retailers with the highest credit-card APRs were Brandsource at 30.24%, followed by Big Lots, Piercing Pagoda, and Discount Tire, which all had rates of 29.99%. Four jewelers—Zales, Sterling Family, Jared, and Kay—also charged rates that were just one basis point shy of 30%.

“The 30% threshold definitely seems to be an important psychological barrier,” Ted Rossman, an analyst at, said in a statement. “These cards are issued by banks headquartered in Delaware, South Dakota and Connecticut—three states that do not have maximum credit card rates.  So, they could charge more, but they’re choosing not to.”

Despite those high rates, many consumers still found retail credit cards irresistible. also commissioned a YouGov survey that found two-thirds of U.S. adults have applied for a retail credit cards, primarily to get a discount or sign-up bonus, but also out of loyalty to the store or because of pressure from the store clerk.

Many consumers who sign up for a credit card at their favorite retail stores may also not be aware when the APRs creep up, whether because the Federal Reserve is raising rates (on which credit-card rates are based) or because a store is ratcheting a card’s rate up itself.

“Those higher monthly payments can be a stretch for a lot of households,” says Sara Rathner, who follows credit-card trends at personal-finance site NerdWallet. “It’s become difficult for many consumers to keep up with what they owe.”

If you do opt to sign up for a retail store’s credit card, look for one that is co-branded with credit-card company like Visa or MasterCard. Unlike store-only cards, they can be used at other retailers and they tend to charge lower rates. found that the average APR on co-branded cards stood at 23.4%, while APRs at store-only cards averaged 27.6%.

It pays to look at the fine print about current APRs on retail-store cards, often found on monthly statements. When rates increase, cardholders typically offer an opt-out period to reject the higher rate. You may have to close out the account itself, though—which means you can’t keep using the card, and you’ll have to pay off the remaining balance.

If you hold multiple credit cards, you may be able to transfer the balance to another account or to a personal loan with a lower rate. Rathner says some cards allow transfers that allow you to pay off what you owe interest-free for a year or more. But, she adds, “you’ll want to pay down your balance before the promotional interest rate ends, or else the APR will skyrocket on the remaining balance.”

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