Retail Credit Cards Charge Much Higher Interest Rates

NEW YORK (MainStreet) — Retail credit cards charge much higher interest rates than most credit cards with an average APR of 23.23%, according to a new report.

The average APR of credit cards issued by America's largest retailers is more than eight percentage points higher than the national average for all credit cards. The highest APRs are charged by Zales, the jeweler at 28.99%, Office Depot at 27.99% and Staples at 27.99%, both office supply stores.

The high APRs from retail credit cards result in many consumers paying interest fees that are nearly as much as the original balance.

If a consumer has a $1,000 balance on the average retail credit card and makes only the minimum payments, it would take the cardholder 73 months to pay off the balance and he/she would incur $840 in interest fees.

That's 17 months longer and $444 more expensive than a $1,000 balance at the national average APR of 15.03% for all credit cards.

Consumers should avoid falling into traps like signing up for a retail credit card to save 15% on a purchase, said Matt Schulz,'s senior industry analyst. The much higher interest rates far outweigh the one-time discount for anyone who carries a balance.

"A lot of times there are these pressurized situations and people won't take a step back and read through the particulars of the card," he said. "Tread very cautiously."

In most instances, the retail stories will offer the same incentives to customers at a later date, so reading the rules in an "informed and calm" situation before making a decision is the best strategy to follow, Schulz said.

The best bet for consumers who can not pay off their credit card balance each month is to pay the card with the highest interest rate first, Schulz said. surveyed the 36 retailers from the National Retail Federation's Top 100 Retailers of 2014 list that offer credit card programs. The analysis included APRs, co-branded offers and rewards programs. The selected retailers offer 61 cards within their consumer card programs: 32 store-only cards, 27 co-branded (use-anywhere) cards and two debit cards.