Retail credit card APRs have not changed despite the Federal Reserve slashing interest rates to near zero this year, according to a new report from CreditCards.com.
Store-only cards have the highest interest rate at nearly 30%. That's the case for a few jewelers, Discount Tire and Big Lots, which sells furniture and appliances.
“They're kind of preying, in some cases, on people who are really desperate to buy something, but may not have the money for it,” said Ted Rossman, an industry analyst at CreditCards.com. “So, it's really all about risk management.”
The website’s survey found more than 43% of people have impulsively applied for a store card at checkout.
That phenomenon may change this holiday season, when much of the shopping is expected to be online.
“It might be less of an issue this year,” said Rossman. “Although, who knows? Maybe the shoppers that are in store are going to be peddled these even more aggressively, so it's something to watch for.”
Store credit cards can be worth it if you pay your bills in full to avoid interest and you're loyal to a certain retailer. That's especially true for cards that offer 5% back on everything you buy. Amazon, Walmart, Target and a few clothing stores offer those kinds of rewards.
If you're just signing up for an initial discount, don't waste it on a small purchase.
Remember a credit card is different from a free loyalty program.
You might be getting into something that could hurt your credit score.