Retail credit cards boast average annual percentage rates of 23.23%, according to a CreditCards.com analysis of cards from 36 of the nation’s biggest retailers.
That’s more than eight percentage points higher than the average credit card APR of 15.03%.
“Retailers dangle incentives like 15% off a purchase to encourage consumers to sign up for their credit cards,” said Matt Schulz, senior industry analyst at CreditCards.com. “But the much higher interest rates far outweigh the one-time discount for anyone who carries a balance.”
If you’re confident you will never miss a payment and you think the retailer’s rewards program would provide you with savings, then it could be a fine deal. But if there’s even a small chance you’ll carry a balance, you could end up paying big money in interest as a result.
Customers with a 23.23% APR credit card, for example, would be hit with $840 in interest if they carry a $1,000 balance and only make minimum monthly payments — and it would take them 73 months to repay that balance. That compares to $396 in interest for the average credit card.
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Article Source: Blake Ellis for CNN Money, http://money.cnn.com/2014/08/07/pf/retail-credit-cards/index.html?iid=SF_PF_River