Retail Credit Cards Interview with KOMO Seattle
CreditCards.com Senior Industry Analyst Matt Schulz spoke on Friday, October 16, 2015 with Connie Thompson of ABC News KOMO Seattle about the October 2015 Retail Credit Cards survey. The interview and transcript are below.
Eric Johnson: Retailers are hoping to get more than your business for the holiday season.
Mary Nam: They’re also hoping to get your loyalty through a store branded credit card. But Problem Solve Connie Thompson says a lot of you should probably steer clear when a store offers you a discount for signing up. Connie.
Connie Thompson: All those discounts sound really good, Mary and Eric. Almost all of us have been offered a discount of 10 or even 20 percent on the spot if we apply for a store credit card when we’re checking out. But, most people don’t pay attention to the interest charges. Here’s a look at just how much interest some retailers expect you to pay.
Credit cards in general make a lot of money for card companies. When you use a store branded card it’s a bonus for the store, since they can track what you buy.
Matt Schulz: So they might be able to target things to you a little more directly in the future.
Thompson: But Matt Schulz says, based on his company’s new analysis of all credit card interest rates, swiping a store branded card can be a bad deal if you carry a balance.
Schulz: Those interest rates that come with it are so high that it’s really hard to make the math work for you.
Thompson: The highest interest retail card, according to CreditCards.com is Zales. The jewelry store promotes great card benefits on its website, but in the fine print, an annual percentage rate or 28.99 percent. Staples is close behind at 27.99 percent interest. You’ll pay 26.99 APR with cards from Dick’s Sporting Goods, JC Penny. Lane Bryant, TJ Max and Toys “R” Us. That’s 11 percent higher than the average rate of all credit cards.
Schulz: And it can turn into hundreds, even thousands of dollars in extra interest, depending on how much of a balance you carry.
Thompson: And if you plan to do your holiday shopping with a store card from Amazon.com, their 25.99 percent interest could wipe out what you save in discounts unless you pay your balance in full every month. Ditto if you get a card from Office Depot OfficeMax.
So here’s the challenge. Next time you’re offered a discount to get a store credit card, ask about the annual percentage rate. Better yet, take home a brochure, read all the fine print, and compare your options before you decide. And I think a lot of us that have store credit cards already, might want to review those interest charges so we can really see what we’re paying once or twice.
Johnson: Do your homework, right?
Thompson: Don’t we say that a lot?
Thompson: Even us grown up gotta do homework.
Nam: It’s the bottom line.