Personal Finance

Credit card rates spurt higher with one at 30 percent

Key Points
  • Of 65 cards, just 10 offer their best customers a rate lower than the industry-wide average.
  • Deferred-interest periods can result in a hefty bill if the purchase is not paid off during the deal.
Best credit cards

Just in time for holiday shopping, retailers have a gift for consumers: higher interest rates on their credit cards — including one that's above 30 percent.

The average retail card rate has risen for the third straight year and now is brushing 25 percent, according to new survey from The BrandSource card rate ranks highest at 30.49 percent.

That interest rate is "ridiculously high," said Matt Schulz, senior industry analyst for "If you can't pay that bill off at the end of the month, the math just doesn't work for you regardless of what the rewards are."

The current average of 24.99 percent, up 1.15 percent from a year ago, compares to an average for general-use cards of 16.15 percent. Of the cards surveyed, just 10 offered rates less than that broader average to their most creditworthy customers.

Highest Retailer Rates

Retailer Interest rate
Big Lots29.99%
Piercing Pagoda29.99%

The yearly survey looks at the current 100 largest retailers and pulls data from those that offer credit cards. For this round, they looked at 65 cards from 40 retailers.

Some of the year-over-year increase can be attributed to three 0.25 interest rate hikes by the Federal Reserve since last December. The last was in June, bringing the rate to 1.25 percent. Consumer credit and loans generally rise and fall along with the central bank's interest rate movements.

With speculation that the Fed will nudge rates up another quarter-percentage point in December, even higher card rates could be on their way, although Schulz said retailers might not be eager to follow BrandSource above the 30 percent mark.

"They might feel that consumers will view [that rate] as simply too high," Schulz said.

Dhiraj Singh | Bloomberg | Getty Images

As for BrandSource, which is a network of locally owned retailers (i.e., furniture, appliances) whose customers can use the card for purchases, the 30.49 percent is the only rate offered, according to its customer agreement.

However, like some other cards with higher rates, the BrandSource card comes with a deferred interest offer, Schulz said. If you don't pay the balance in full during that no-interest window, you'll end up paying 30.49 percent interest on the full purchase price you originally charged. For a $1,000 appliance, you'd get hit with $304.90 in that situation.

"Suddenly that deal doesn't look so good," Schulz said.

BrandSource did not respond by publication time to a request for comment. Nor did Citi, which issues the BrandSource card.

The best thing people can do is not make an uninformed decision under pressure.
Matt Schulz
Senior industry analyst for

Schulz said consumers often confuse deferred-interest periods with zero-interest introductory rates. With the latter, you only pay interest on the balance remaining at the end of the deal.

Along with higher interest rates as the holiday-shopping season approaches, consumers also can expect to be offered one of these store cards when they get to the checkout counter at retailers that offer one.

"The best thing people can do is not make an uninformed decision under pressure," Schulz said. "If you're interested in the card, say no but ask for a brochure, take it home, read over the details and see if the offer still sounds good. You can make a much more informed decision."

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