Personal Finance

Retail credit card rates average 26%. Here's how to head off trouble if you sign up for one

Key Points
  • Across all types of credit cards, the average is 21.1%, according to
  • If you're offered a retail card at checkout, be sure to make sense of the fine print, not just the sales pitch.

There's more than just candy and seasonal goodies you might want to avoid at store checkouts this holiday season. Watch out for potentially expensive credit card offers, as well.

Retailers typically ramp up their efforts each year during busy shopping months to get you to apply for a card, which might come with some sort of special financing, an upfront discount or rewards. Yet with interest rates on some of these cards hovering around 30%, it's important to know exactly what terms you're agreeing to when you sign up.

"This is something many of us will be offered during the upcoming holiday shopping season," said Ted Rossman, industry analyst at "But you don't want to grab one in the heat of the moment and have it end up damaging your finances."

Holiday shoppers at a Macy's store in New York.
Source: Getty Images

The average annual percentage rate — the interest rate plus any annual fees — for retail credit cards is a hair above 26%, according to new research from It's slightly higher than a year ago, despite a corresponding small drop in the prime rate (which, generally speaking, banks rely on for their rate calculations).

In comparison, the average APR across all credit cards is 21.1%.

Store-only cards — those that can only be used at a particular retailer — come with the highest rates, averaging 27.5% (with some around 30%), the research shows. Co-branded cards — for example, those that bear a retailer's name and Visa — average about 23.4%.

Together, those types of accounts carried roughly $79.3 billion in outstanding balances at the end of July, according to Equifax research. That's about 9% of the total $868 billion in credit card debt shouldered by U.S. consumers overall, as measured by the Federal Reserve Bank of New York.

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Meanwhile, consumers are expected to spend 3.8% to 4.2% more during this year's holiday shopping season than they did in 2018, according to the National Retail Federation, whose forecast focuses on November and December sales and exclude spending on autos, gas and restaurants. The estimate equates to a range of $727.9 billion to $730.7 billion being spent over last two months of this year.

If you come across a retail card offer when you're doing your holiday shopping, be sure to make sense of the fine print, not just the sales pitch.

For example, while an upfront discount or bonus might make the offer appealing, carrying a balance and paying interest on it could erase the initial benefit of the deal, Rossman said.

On the other hand, "if you're really loyal to that store, and you get rewards for shopping there and you can pay your bills in full each month, it could make sense to have their card," Rossman said.

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However, if you are offered a card that comes with a deferred-interest deal, be certain you understand how it works.

"The gotcha with those is that if the balance isn't paid in full during the promotional period, they'll charge you back interest," Rossman said.

In other words: Say you make an initial purchase of $2,000 on a card that comes with a 30% interest rate after the initial deferred-interest period of 12 months. At the end of that year, even if you have a small balance remaining, you'll owe 30% interest on the full $2,000, or $600.

This is different from a zero-interest introductory period, when you would pay interest only on the balance remaining at the end of the deal.

The research also shows that 11% of shoppers have signed up for a credit card due to feeling pressure from a sales clerk.

"That's the last reason you should sign up," Rossman said. "Take a brochure home and think about it."

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