(InvestigateTV) — Credit cards issued by retailers hit a record high interest rate of 30.45% this year according to Bankrate.
Ted Rossman with Bankrate said we used to think of 30% as an unofficial threshold credit cards never dared to cross.
“Store cards are a special case, they are easier to get,” Rossman said. “So, issuers have higher rates because of the lower credit quality. They also rely more on late fee revenue and because the Consumer Financial Protection Bureau are trying to cap late fees. Issuers are pulling other levels like raising rates and other fees.”
According to TransUnion the fourth quarter of the year is when most of the store credit card sign ups happen. Shoppers are asked at the store counter or the online check out if they would like to save 20% by signing up.
“You have to be careful. It’s fine to say “no, not right now” or “I’m going to think about it.” Sometimes I hear people sign up for these and they don’t even realize it’s a credit product,” he explained. “They just hear 20 percent off today’s purchase, and they think it’s some kind of store promotion or store loyalty card. It involves a credit check and there’s a hefty interest rate if you don’t pay in full. You really have to be careful here.”
Rossman also said a lot of store credit cards have deferred interest promotions where there is no interest on a purchase for 12 months.
He reminded consumers that means if they don’t pay in full by the time the clock runs out, the credit card company goes back and charges all the interest accrued in that years’ time frame.
He said is it essential to be careful and pay off those cards in the time frame.
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