Research and Statistics

Holidays bring a surge in retail cards, study finds


Number of cards, amounts owed, delinquencies all projected to rise

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As the holidays approach Americans are getting more retail store cards and charging more on them, a study by the credit bureau TransUnion finds – and then sometimes forgetting to pay the bills.

“Some people have problems making payments. Others simply forget, they are having a good time with their families,” said Nidhi Verma, TransUnion senior director of research and consulting.

There are about 125.3 million consumers with at least one store card in their wallet, up 500,000 from a year ago, TransUnion said. The cards are popular with nonprime consumers. They account for half of store card balances.

TransUnion projects that the average balance on consumers’ store cards will grow to $1,768 per person in the fourth quarter, up $43 from the same period in 2015 and $120 from 2014. The average available credit is growing as well, reaching $7,100 in store card credit lines for people who have at least one such card, Verma said.

The acquisition of retail store cards spikes sharply during the holiday season, according to TransUnion. Discount stores double the rate at which they issue their in-store cards during the holidays, while online retailers nearly double. Jewelry stores increase their store cards accounts by 1.8 times the rate of non-holidays, and department stores by 1.56 times. Clothing, electronics and furniture sellers also see increases.

With the new accounts and higher balances come greater difficulties making payments. In 2016, TransUnion projects, about 1.4 percent of store card users will lapse into serious delinquency – late by 90 days or more. That’s up from 1.3 percent of users a year ago and 1.21 percent in 2014.

At Clarifi, a consumer credit counselor in Philadelphia, many clients who are struggling with credit card have collected several store cards, President Patricia Hasson said. It is not uncommon to forget about a card that was opened during a spur-of-the-moment decision at the sales counter, she said. “If you open up multiple cards, the more you’re trying to manage – the easier it is to forget due dates, and you don’t really know how much debt you’re accumulating.”

Store cards often offer on-the-spot discounts at the cash register. But late fees and interest on that purchase can easily wipe out any savings.

Balances on regular bank cards also climb during the holidays, stretching consumers’ budgets. But retailer-specific store cards carry a big negative for consumers: much higher interest rates. APRs on retail cards average 23.83 percent,’s 2016 retail card survey found, compared to about 15 percent for general purpose cards.

To see how expensive that is, consider the cost of paying off the $1,768 average store card balance. Making only minimum payments, it would take 130 months and $2,402 in interest to extinguish the store card debt – 18 more months and $1,061 more in interest than at the average rate for a bank card.

The takeaway for consumers is to shop for a good interest rate if you can’t pay off the balance in one billing cycle.

“Don’t get caught at the point of sale,” Hasson said.

See related: Exclusive perks can make retail cards a good deal

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