Oct 09, 2016

New findings reveal, according to a survey done by CreditCard.com that the number for America’s APR in retail credit cards has risen to a whopping 23.43 percent. Compared to other cards, this number is significantly higher than the national average of all credit cards, which is 15 percent. The analysis done by CreditCards.com covered the top 100 retailers by sales volume. Some retailers include Walmart, Zales, and Dillard’s just to name a few. Of the 100 retailers, 42 of the retailers offer some type of card program. Some retailers go as far as to offer more than one type of card that you can choose from. There are three major card types offered:

·      Co-branded- Cards sponsored by a retailer and a bank or card network

·      Private label- Store-only credit cards

·      Debit-Retailer-issued debit cards are tied directly to your checking account

Opening a retail card with high rates can make a difference for those trying to pay down a card balance. It takes nearly twice as long to pay down the balance on a retail card with an APR of 23.43 percent than it would a card closer to the national average of 15 percent. The problem is that the interest rates are expected to continue rising for retailer cards. While many consumers have put up with high retail card interest rates in favor of discounts and rewards, this very well could be the point when consumers open their eyes and start to push away from such bribes knowing it will harm them in the end.

On the other hand there can be great benefits for those with good credit. This group is able to open what is called a co-branded card. This type of card is subject to the national average APR of 15 percent, leaving those with good credit to escape having to pay the high price that most consumers have to pay with retailer cards. However, every credit card is different so it’s vital for each consumer to sit down and look at the terms. Many card programs change over time resulting in higher fees for the consumer, lesser-priced discounts or fewer reward points. While other store card loyalty programs constantly make yearly changes to best fit the need of the consumer.

This year's survey revealed many retailers are using rewards to keep cardholders engaged and spending. The reward program is presented with an offer of about 10-15 percent off for an initial purchase. This is great for first time card holders or those with little to no credit who desire to start building credit. This type card doesn’t require great credit scores to get the bonuses that are offered when signing up. 

With high interest and complicated loyalty programs, retail cards may not be for everyone. However, certain consumers may be able to use them to build credit while taking advantage of store discounts and other money-saving opportunities. Just make sure you aren't charging frivolous purchases for the sake of building credit.

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