Average Retailer Credit Card Interest Rate Hits 29.93 Percent

Holiday shopping is starting, and what better way to do it than to buy today what you might not be able to pay for tomorrow.

According to Bankrate’s annual Retail Cards Study, the average APR for retail credit cards reached a new record high of 28.93% this year. This is up from annual rates of 26.72% in 2022, and 24.35% in 2021. Retail credit cards are those offered by retail brands, generally brick-and-mortar or online retailers.

Some of these retail cards can only be used at the issuing retailer. According to Bankrate, the average store-only credit card charges 30.24% interest this year (up from 28.22% last year), while the average co-branded credit card (usable in most locations that accept credit cards) charges 27.64% (up from 25.01% last year). These interest rates are significantly higher than the national average for all credit cards, which clocks in at 20.72%, according to Bankrate.

The highest retail credit card APR is 33.24% on the Academy Sports + Outdoors Credit Card, the Burlington Credit Card, the Good Sam Rewards Credit Card and the Michaels Credit Card. [Editor’s question for readers: “What is the definition of usury?” ~ Managing Editor, Isaac O’Bannon.]

According to the Bankrate study, the highest interest rate cards are the Coast to Coast Visa/Visa Signature and the Good Sam Rewards Visa/Visa Signature, which charge some customers up to 33.24%. But it is noted that some customers can receive an APR as low as 22.24%, depending on creditworthiness.

The study found 16 retail credit cards charge 32.24% to all cardholders who carry balances, including 13 store-only cards and 3 co-branded cards. These include Jared, Kay Jewelers, Zales, QVC, Walgreens, Ross, Victoria’s Secret, T.J. Maxx and Wayfair.
Furthermore, nearly half (53) of the 107 cards that Bankrate surveyed charge an average interest rate over 30%.

“We used to see 30% as the high end for retail credit card APRs. In fact, 29.99% was an artificial barrier that few dared to cross – for psychological reasons, mostly,” said Ted Rossman, Senior Industry Analyst at Bankrate.com. “But the market has blown past that threshold given the Fed’s aggressive series of interest rate hikes over the past year- and-a-half. Many retail credit cards now charge all of their balance-carrying customers rates in line with what we used to think of as figures reserved solely for a deep subprime audience.”

The lowest average retail credit card APR is on the Amazon Secured Card (10%), followed by the Military Star Card (15.49%; limited to military exchanges, commissaries, and related websites). Additionally, the Bass Pro Shops CLUB Card charges 9.99% at Bass Pro Shops and Cabela’s, but up to 31.99% elsewhere.

Deferred interest is a common promotional tactic on retail cards. When a retail card offers a 0% interest promotion phrased as “deferred interest,” that means cardholders need to pay the entire balance by the end of the term in order to avoid interest charges. Otherwise, cardholders will be charged all of the interest that would have accumulated all the way back to the beginning of the period. This policy is common on retail cards, but not on general-purpose cards.

“If you ever carry a balance, a retail credit card probably isn’t the best choice for you,” Rossman added. “If you finance a $1,000 purchase at the average retail card interest rate (28.93%) and only make minimum payments, you’ll be in debt for 50 months and will owe $715 in interest. But if you’re able to pay in full and avoid interest, these cards might make sense if you’re loyal to the store. Some retail cards give 5% cash back at their stores, which is probably better than you would get from a general-purpose credit card.”