New data shows credit card interest rates for retail stores have hit a record high of 26.72%, with APRs steadily growing as inflation continues to blaze on.
10/08/2022 1:15 P.M.
1.5 minute read
A new study by Creditcards.com showed the average interest rate for retail credit cards has hit a record high of 26.72%, while general purpose credit cards now charge an average of 22.6%, The Hill reports.
The Federal Reserve has increased the rates at which banks can borrow money from one another, increasing the cost of borrowing across the economy, resulting in the rise in annualized percentage rates (APRs).
There are currently 24 retail credit cards on the market that charge 30% APR, including those from Burlington, Dick’s Sporting Goods and Wayfair. As of last week, the Fed was advising banks to charge each other 10 times that amount, according to the article.
The survey found that the Speedy Rewards Mastercard, the Kroger Rewards World Elite Mastercard, and credit cards provided by nine of Kroger’s affiliated brands had the highest retail credit card APRs at 30.74%.
“From a consumer perspective, 29.99% is an astronomical rate,” said Ted Rossman, an industry analyst with Creditcards.com. “If you charged $1,000 and only made minimum payments at 29.99%, you would be in debt for 51 months and would end up paying a total of $775 in interest. Consumers may want to be more thoughtful about their retail card applications—last year, we found 68% who had applied for a retail card had done so impulsively at least once.”
The federal budget deficit and 30-year fixed-rate mortgage are only two examples of the many debt financing mechanisms that are being impacted by the Fed’s increasing interest rates, according to the article.
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