Retail Credit Cards Interview with KGO Radio San Francisco
CreditCards.com Senior Industry Analyst Matt Schulz spoke on Monday, October 19, 2015 with Jason Middleton and Jennifer Jones-Lee of KGO Radio San Francisco about the October 2015 Retail Credit Cards survey. The interview and transcript are below.
Jennifer Jones-Lee: Every major store has its own credit cards these days. Usually with special deals and other offers on in-store sales. But are they a good deal?
Jason Middleton: Online to give us the inside scoop on everything from your Macy’s card to the company Staples card is Matt Schulz. He’s Senior Analyst with CreditCards.com. Good morning, Matt. So what’s the downside in one of these company credit cards?
Matt Schulz: The downside is that the interest rates on them are really high. The average retailer’s credit card has a 23.43% interest rate, which is really high compared to the national average for all credit cards which is about 15%.
Jones-Lee: Now what about the difference between when you go into a store, say like Target where it’s just a Target credit card versus say a story like the Gap where they say, “Oh, but you can use this at the Gap and Old Navy and Banana Republic”? Does that make a difference?
Schulz: Yeah, the ones that you can use anywhere are more likely to have a lower interest rate than the ones that you just use specifically in one particular store. For example, the Zales card, which had the highest interest rate we saw, of 28.99%, is one that can only be used in Zales.
Middleton: And Matt, you’d think a store card’s interest rate would actually be a little bit lower since they’re trying to encourage you to shop in their store. Why are these interest rates so high? And aren’t they user-risk?
Schulz: It’s interesting. Specifically the Zales one and the Staples card, which was 27.99%, are up around the level that a lot of cards have as a penalty rate that they give to you if you’ve been 30 or 60 days late with a payment. So it’s really, really important to remember that if you get one of these cards you’ve got to pay that balance off as soon as you possibly can. Otherwise that’s just asking for trouble.
Jones-Lee: Yeah, Matt, that’s what I wanted to ask you. What if you are a very responsible consumer, you get one of these cards – knowing that you can save that immediate 10, 15% or whatever it is – and you know you’re going to pay it off immediately? You know, the next week or something like that – does it ever, ever benefit you to get one of these cards?
Schulz: Oh yeah, it can definitely work for you. Because these stores do give 15, 20% off on your cards and if you pay the balance off at the end of the month, you can make it work for you. You just have to make sure you pay that balance.
Middleton: Alright, thanks a lot. Matt Schulz joining us live on the KGO Live Line from CreditCards.com. Senior Analyst with that company.