Jordan Siemens / Getty Images

Retail store card APRs hold steady despite Fed rate cuts

A new poll reveals 62% of consumers have applied for a retail card at some point


It might be tough to say no to a big discount at checkout, but there are things you must consider before opening a retail credit card. Find out everything you need to know now.

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

If you’ve ever checked out at a store and been offered a credit card application along with savings of, say, 20% on your purchase, it’s tough to say no.

In fact, 62% of U.S. adults have said yes to applying for retail credit cards at some point, and 69% of those have applied on a whim at checkout at least once, according to a new survey by

But before you sign on the dotted line, there are things you must consider.

Although the Federal Reserve cut the federal funds rate to near 0% in 2020, many retail cards still charge exorbitant APRs­, data show. (See methodology.)

Keep reading to find out everything you need to know about signing up for one of these cards.

2020 retail card survey key findings

  • The average retail credit card rate went down from 26.01% last year to 24.43%. The average store-only card rate decreased from 27.52% to 25.90%, and the average co-branded card rate fell to 22% from 23.39%.
  • When you average the high and low APRs, the national average for all non-retail cards went down from 21.10% last year to 19.69%.
  • Several store-only cards’ interest rates stayed at a jaw-dropping 29.99%.
  • Although the cards with the highest interest rates remain unchanged, 67 out of the 84 cards surveyed by have lower APRs than last year, while 15 APRs stayed the same and two increased.
  • In spite of the fact that retail card rates are generally higher than “regular” credit cards, stores often give customers big discounts on their first purchases, which might make it worth it for big-ticket items.
  • More than half of respondents in the poll portion of our survey said they got a retail card for the discount or promotional offer (60%). Significantly fewer cited the ability to finance a purchase over time (29%), some said they wanted to build their credit score and a few said they loved the store (26%).

See previous retail store card surveys: 2019, 2018, 2017, 2016, 2015, 2014

High interest rates are for high-risk borrowers

High interest rates usually mean high-risk borrowers, and this is the reason store credit card APRs are so high, said Howard Dvorkin, CPA and chairman of the website

Simply put, the store (or lender) has decided its shoppers are more likely to be risky prospects and not pay back their debts.

Of course, that means qualifying for a store credit card is typically easier than qualifying for a general purpose card, which might be attractive for those with lower credit scores.

See related: Should you get a retail card during the pandemic?

Watch out for deferred interest

Deferred interest can be dangerous, and it’s critical to pay your balance in full before the deferred interest period runs out so you can avoid paying interest.

“Even if a single dollar is left unpaid after the deferred interest period is up, you’ll pay interest accrued from the moment you made your purchase – and this can add up, especially if you use 12 months of deferred interest or longer,” said Adem Selita, CEO and co-founder of The Debt Relief Company.

Most of these credit card companies, he said, are just banking on consumers opening a card for an extremely short-term benefit – such as 20% off an entire purchase at Macy’s ­– and using the card more frequently later on, while getting charged interest.

These cards are typically opened during the holiday season, Selita added, so odds are some consumers will open a retail card to buy gifts and pay outrageous APRs somewhere down the line.

Some promotional credit card 0% APR introductory offers are reasonable, but make sure you read the fine print, cautioned Selita. And if you sign up for a retail credit card, make sure you are not accepting a 20% discount on your purchase in exchange for an exorbitant APR.

“This really defeats the purpose, and if you do the math you will see that the items you bought are actually costing you much more than the retail price you paid – due to compounding daily interest,” Selita said.

Highest APR retail store cards

RetailerCard APR as of September 2020
Big Lots29.99%
Discount Tire29.99%
Jared The Galleria of Jewelry29.99%
Kay Jewelers29.99%
Piercing Pagoda29.99%
Sterling Family of Jewelers29.99%

Retail cards can help you build credit, earn rewards

“The only reason I would advise a client to consider a retail store credit card is to begin building credit,” said Kasey Ring, president of the financial coaching firm Upward Personal Finance.

Because many of these cards have looser credit requirements, it may be a good way for a young person (or someone needing to start over) to build credit with a very disciplined approach, she explained.

“I would advise you to put a very small amount on this card and pay it off in full every month.” Ring said. “The use-and-pay repetitive approach will build credit over time.”

When you eventually qualify for a higher-quality, no-annual-fee rewards credit card, he said, close out the retail card and never look back. (But keep in mind that closing a credit card can lower your credit score by decreasing your overall available credit.)

On the other hand, many retailers are offering cards that feature unique loyalty programs, member-only discounts and cash-back incentives that can add up quickly for frequent shoppers, said Nishank Khanna, CFO at Clarify Capital.

“Depending on the total rewards value and the frequency with which a consumer shops at a specific retailer, opening up a store-only card can save some customers a large chunk of change,” he said.

Co-branded cards for the win

According to Khanna, when you compare store-only cards to co-branded cards, the latter come out on top almost every time.

He said these cards tend to be more lucrative because you can take advantage of other rewards and deals across multiple brands, making it a much less restrictive option.

“Factor in the convenience of being able to use a single card for different purchases at different places and you’ll be hard-pressed to make a case for most store-only cards,” Khanna said.

Co-branded cards are often a better choice than store-only cards because you can use them outside the store and earn rewards on other purchase categories (and these cards also have lower APR in general – but they usually require a higher credit score to get approval).

Also, a co-branded card could be a better option if you want a lower APR, he added, because co-branded cards can use risk-based pricing. Many co-branded cards advertise variable APRs, while store-only cards usually charge flat interest rates, according to data.

For example, the Store Card charges a flat 25.99% APR, whereas Amazon’s co-branded card – the Amazon Prime Rewards Visa Signature card – comes with APRs of 14.24% to 22.24% based on creditworthiness.

See related: A tale of two issuers – Picking the right co-branded credit card

Lowest APR retail store cards

CardAPR as of September 2020
Military Star Card10.24%
Sears Home Improvement Account14.40%
Costco Anywhere Visa® by Citi15.24% (variable)
Apple Card10.99% to 21.99% (16.49% average)
Dillard’s American Express Credit Card9.99% to 24.99% (17.49% average)

Things to consider before you apply for a retail card

Khanna cautioned that shoppers must carefully review the advertised APR on a retail store card before pulling the trigger and opening an account.

In addition, consider your ability to pay off the balance in full due to the higher APRs of retail cards – and that interest could be charged from the initial purchase date if you take advantage of a 0% offer.

Last, consider how applying for a retail card might affect your credit score.

Each hard inquiry lowers your score by about five points, so applying for multiple credit cards in a short period of time could have a significant impact on your credit.

And opening a new credit card can shorten your length of credit history, which accounts for 15% of your FICO credit score.

Bottom line

The temptation to open a retail card for a great promo or deep discount is real, but pause before you do – and consider a general purpose credit card instead.

General purpose cards often have lower interest rates, better rewards programs and higher sign-up bonuses than retail cards.

And you won’t have to worry about deferred interest sneaking up on you.

That said, if you really love shopping at a certain store and can pay your bills in full to avoid interest, a retail card might make sense.

Survey methodology conducted the interest rate research in September 2020 using publicly available terms and conditions disclosures. Each of the 100 largest retailers (as defined by the National Retail Federation based upon 2019 sales) that offers a retail credit card program was selected for the study. This included 93 cards from 67 retailers (58 store-only and 35 co-branded cards).

Additionally, commissioned YouGov Plc to conduct a consumer survey. Total sample size was 2,801 U.S. adults, including 1,774 who have applied for a retail credit card. Fieldwork was undertaken online from Sept. 2-4, 2020.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

Credit Card Rate Report
Cash Back

Questions or comments?

Contact us

Editorial corrections policies

Learn more