Watch Out For High Interest Rates On Store Credit Cards

Seems whenever you check out at a store these days the clerk is always asking if you want to sign up for the store credit card. They’ll tell you that you can save 15% today, but what they’re not telling you is how high the interest rate is: an average of 21.96% and in some cases, as high as 23.99%, says a survey by Congressman Anthony Weiner. That’s almost as high as the default rate you would pay on a normal credit card. Before biting, make sure you read the disclosure agreement in full to find out the APR. If you end up not paying off that balance in full, that one day of savings could eventually be erased by compounding interest. Inside, the interest rates and grace periods for the in-store credit cards of 35 top retailers…

ABC Carpets 23.99% 0% APR for 6 months**
Radio Shack 23.85% 0% APR for 2-12 months**
K-Mart / Sears 23.15% 0% APR for 24 months** 20 days
Bloomingdales 22.90% 10% off first purchase –
Macy’s 22.90% 10% off first purchase 25 days
Saks 5th Avenue 22.90% 10% off first purchase –
Fashion Bug 22.90% – 25 days
Lane Bryant 22.80% 15% off first purchase 25 days
Express 22.80% – 25 days
Ann Taylor 22.80% 10% off first purchase 25 days
Abercrombie & Fitch 22.80% – 25 days
New York & Company 22.80% – 25 days
Design within Reach 22.80% 9.9% APR for 12-24 months –
Ikea 22.65% 0% APR for 3 months 25 days
Neiman Marcus 22.25% – 25 days
Bergdorf Goodman 22.25% – 27 days
Circuit City 21.99% 0% APR for 3 months 20 days
Target 21.99% 10% off with first use 25 days
Victoria’s Secret 21.99% Up to $75 back 25 days
Toys “R” Us 21.99% – 20 days
PC Richard 21.98% 0% APR for 12 months** –
Staples 21.96% – 20 days

Average 21.96% – 25 days

Brooks Brothers 21.60% 10% off first purchase 26 days
Lord & Taylor 21.60% 10% off first purchase 25 days
JC Penny 21.00% 10% off first purchase 25 days
Home Depot 21.00% 0% APR for 6 months 26 days
Gap / Banana Republic / Old Navy 21.00% 15% off first purchase 26 days
Barney’s New York 21.00% – 26 days
Nordstrom 20.90% $20 rewards certificate 25 days
J. Crew 20.99% 10% off first purchase 25 days
West Elm 20.75% – 25 days
Pottery Barn 20.75% 5% off for 90 days 25 days
Best Buy 20.40% 0% APR for 3 months** 25 days
Fortunoff 19.92% – 25 days
Crate & Barrel 19.80% – 25 days

**Special interest periods may vary based on the cost of the item purchased or speed of repayment. If consumer
does not pay entire

SOURCE: Store Credit Card Rates: Consumers Beware (PDF) (Thanks to John!)


Edit Your Comment

  1. Rando says:

    Macy’s is anywhere from 10% – 20% with 15% being the most offered(depends on the state), and it’s good for 48 hours.

  2. Rando says:

    @Rando: Bloomingdale’s is also 48 hours.

  3. freshyill says:

    THese are almost always a bad idea. There are exceptions, like when Best Buy offers 24 months without interest (as long as you pay it off in that time). I seem to remember 48 months in a few cases.

    I know you should always use a real credit card for big purchases (for the protection they usually offer), but let’s face it: These deals are tempting, and you can really screw yourself if you mess up, but they can also really work out in consumers’ favor, if you’re smart.

  4. Concerned_Citizen says:

    These are always a good deal as long as you have no intention to use the card to hold a balance. And your using it for a larger purchase you already were going to make.

  5. brandymb says:

    And in almost any of these stores you can use your 9% master or visa card, so why?

  6. GearheadGeek says:

    The only good reason to have the store card is if they offer promo financing like 12 or 24 months no interest AND you are careful about following their rules to avoid big interest “gotchas”. Before BestBuy went to hell I used that card that way and never paid interest, and I’ve renovated 2 kitchens using Sears appliances for which Sears ended up loaning me money for free because I paid the balance before the promotional financing ended.

    Short of that, use a credit card you trust that benefits you or *gasp* pay cash.

  7. wellfleet says:

    Working at Best Buy, I’ve seen our store credit card be a great deal, like the 36 months no-interest promos. But, and I tell this to everyone applying for the card, HSBC is absolutely vicious about collecting their dues, and even one late or missed payment will end your financing and jack your rates to the high-20% range.
    Only sign up for it if you are very diligent about paying things on time. BB also has 48 months with a fixed 11.9% interest, which is lower than many regular cards.

  8. Skankingmike says:

    They charge these outlandish interest rates because stores are forever getting people in the door with no interest for bla bla bla and some percentage off each purchase not just your first.

    I’m sure the credit rates of retail stores aren’t that low because they know that the vast majority of people simply just want the special deal of the moment and will almost never use their card for out side the store purchases.

    I have to say that Amazon has a great deal with cards. But really in the end, all the Retail stores want is more info to sell to other people when they run out of money.

  9. amv09 says:

    the macy’s card gives you 10-20% off the first two days. The percentage depends on the event going on like a one day sale, etc. The interest is very high but if its a large purchase like furniture or fine jewelery you can get 0% apr for 6-12 months which is a good deal as long as you pay it off. Bloomingdale’s card works the same because it is the same company as macy’s.

  10. Ezra Ekman says:

    I can’t speak for some store cards, but there are some pretty massive savings (off the normally-overpriced department store prices, anyway) offered to Macy’s cardholders. An example of this is if you shop during one of their many quarterly, monthly or even weekly sales (when things drop by up to 50% off), some of these items are an additional 10%-20% off the discounted price if you use your Macy’s card, and coupons that are mailed out semi-annually (such as $15 off a $40 purchase, 20% off the final subtotal, etc.) can further reduce the price of your purchases. Is the Macy’s card (at 18% APR, for me at least) worth it to someone who shops at Macy’s? In my opinion, absolutely. Just don’t carry a balance and it won’t come back to bite you.

    The problem, of course, comes when folks don’t pay off their balances. In fact, I would hazard a guess that the vast majority of the ways that most credit cards screw over consumers is when the consumers choose to carry a balance. Of course, sometimes you don’t have a choice. There are bills to pay, perhaps a job has been lost or a bonus hasn’t come through, and you have to choose to either pay off your CC balances or pay your other bills. But honestly, if you’re that concerned about high interest rates and you can’t afford to keep your balances at $0, why on earth are you shopping at department stores?

  11. warf0x0r says:

    My BR card is around 21%. They have collected about 17 dollars from me since 2000. I get 5% cash back on all my purchases. I’ve probably gotten about 300 dollars worth of free gift cards. Plus all the sales specials and free shipping offers. I’d buy the cloths anyways so why not get some free money.

  12. kenblakely says:

    First of all, only a fool pays interest on credit cards, so if this article is really that useful to you, then you’re a ….

    Second, grabbing a new store card for a 10% discount is *usually* a bad idea except in very specific circumstances. Why? because the store is gonna do a hard pull on your credit records to grant you credit. hardPulls = lowerScore = [higher Interest rates On Future Loans]+[possible rate jacking by other cards]

    A hard pull on your credit report is something you should get compensated for, because there’s a real cost to you. Opinions differ, but I usually won’t allow a hard pull for less than an expected $150 – $200 benefit.

    So….if you’re buying a big ol’ plasma TV for $2500 then yes; grab that 10% discount for a store credit card, then pay it off immediately or, if you’re lucky enuf to get a ‘same as cash’ deal, pay it off as slowly as you can without incurring interest/penalties. Otherwise, be judicious with accesses to your credit accounts…..

  13. balthisar says:

    @kenblakely: Who cares about the hard pull compared to, you know, having open yet *another* line of credit and increasing your debt ratio? The hard pulls go away. Open lines of credit don’t go away until years after you close them.

  14. chiieddy says:

    I recently had my husband get the Macy’s card when we were working on completing our registry. The limit was less than we needed but here’s a trick (we were originally going to pay with a rewards card, go home, and pay the bill).

    We went to the ATM and took out above the $1000 we needed and then paid it to the credit card in the store.

    Our final bill had about $200+ in first day (or two) discounts on it.

    We’re shredding the card when it arrives. The bill is already paid in full.

    The cards are useful when you use them smartly.

    One day, when we maybe complete out the last bit of the registry, if we can afford to, we’ll do a joint card and play the same trick. I figured out the remaining cost for that and we’re looking at $600 or so in savings if we play the game.

  15. thelushie says:

    @Ezra Ekman: That is what I told people when I worked for Macys. Take advantage of the sales and then pay it off immediately. No interest is accured if it is paid off within 28 days. When you get to platinum and black levels, the $25 certificates would come rolling in saving even more money. One large purchase would send you into black status. I had one lady who redid her home and bought her furniture and other household items from Macys. Because of her certificates, she didnt’ pay for clothing fora very long time. The one downside is Macys credit is a bitch to work with. They are rude to Macys employees.

  16. SadSam says:

    I generally don’t use credit cards at all (except for biz travel) but my husband uses a Home Depot CC for expenses for our investment properties. The good thing about HD is that they regularly run 0% for 6 mos (sometimes a year) and 10% off purchases over $200 specials if you use your HD CC (I’d say they run the specials at least 6 times a year). They also send him extra discounts as a CC holder.

  17. thelushie says:

    Only a fool pays interest on credit cards? Hmmmm, well, what about the fools who pay interest because they can’t pay off the balance when they have had a major illness or are out of work for a period. I hate blanket statements like that. Only fools make them.

    And an ammend to my last post. Macys credit is rude to employees and I had heard horror stories about the way they treat customers. We are talking Comcast employment rejects. In my time working for Macys, I had one very helpful lady. And I called them on a fairly regular basis.

  18. kenblakely says:

    Here’s another blanket statement – only fools don’t have reserve money to fall back on so they don’t need to pay interest to credit cards. Non-fools recognize high-interest credit for what it is – a (usually) one-way ticket down into a debt hole.

  19. Jesse in Japan says:

    Hehehe, Anthony Weiner.

  20. ottawa_guy says:

    Yep have to add my comments in here.

    I did apply for a HBC Mastercard (Canadian Dept Store, similar to Target) because I got 25% off what I was purchasing that day… I was approved, but they kept the limit low which was nice. It didn’t hurt my credit at all. I was just approved for another low interest APR credit card just last week without problems.

    But in regards to a big electronics such as Best Buy, or any furniture store… Yeah, you can get 0% financing for anywhere from 6 months to 48 months. When you ask them for that, they like to tack on “Administration charges”…sometimes for up to $199.00 just because you want to buy that new TV or dining room set on their credit card which can range from 21% – 32% APR.

    You have to watch out for that, and if you are paying it in a few months, it would be best to use your credit card and get the rewards back, or use a low APR card something like 11% or so.

    But, unfortunately people like to spend thousands of dollars on stuff when they don’t have the financial planning to pay for their purchases. Instead of taking a $3,000 loan out because they can “buy now pay later” and make sure before they do that, they can pay $150.00 a month for 20 months and have it paid off before the 24 month no interest promo runs out, they always get statements and say “oh honey, we have a year to pay this off don’t worry”. The year goes buy and now they make their 150.00 payments as interest payments and never bring the principal down.

    As for no interest financing, I have seen GE Money and Citi Financial the worst of the worst! 32% APR interest, thats robbery in my mind.

    Sigh, but people don’t read fine print, do they?

  21. quail says:

    Department store credit cards have always carried a higher than normal rate, but they are the easiest to get when you’re young and have no credit history. You just have to be smart about your purchases and payments.

    In my early 20’s my first credit cards were Sears and J.C. Penny’s. Each had only a $500 limit to start with and I bought the necessities I needed. Clothes and starter cookware for the most part. I never let the balance get above what I could pay off in 3 months, and I never made purchases until that 3 month balance was paid in full. This got me an excellent credit score and a Visa eventually.

    The current trend of no payments and 0% interest for 12 months is a tricky beast. My wife and I did it with some furniture for my son’s room with the store’s credit card. What we didn’t realize was that the store wasn’t going to send statements after the first one if we didn’t make purchases. We had to call the credit department each month to find out our balance and payment. They actually wanted you to forget you could pay off the principle before the interest kicked in.

  22. Scuba Steve says:

    Applying for any of these cards will hurt your credit score. Period.

  23. Scuba Steve says:
  24. Underpants Gnome says:

    Helzberg diamonds: 12 months 0 interest, but if you don’t pay it off in 12 months, 20% on your entire original balance, so that 13th month is a doozy. Lousy smarch weather.

  25. Rando says:

    @thelushie: Other way around…lol

  26. chiieddy says:

    @ottawa_guy: I did that with Best Buy when I bought my fridge, oven and dishwasher. Never paid one cent of interest.

  27. chiieddy says:

    @Scuba Steve: Yes, but every once and awhile, getting a card for a significant discount will not destroy your credit if it’s already in good shape. In addition, I’ve never had a single credit inquiry drop me 100 points. 10 or 20, but not 100. When I got a car loan last November, my Transunion score went from 790 to 780. It’s not worth sweating that small a change. It’s also since completely recovered and exceeded the drop.

  28. Coelacanth says:

    @kenblakely: Not everyone has the luxury of building up an emergency bank account the moment they enter adulthood, either. Self-supporting college students have to deal with substience-level conditions.

    Interest sucks, but credit cards can still be used responsibly as long as there’s a decent repayment plan and the person is aware of the true, final cost of their purchases.

  29. SadSam says:


    Additionally, the APR on husband’s HD CC is 21%. To maintain the 0% for 6 mos. I have to make the minimum payment each month (on-time) and pay off all charges within 6 mos. Since we don’t normally have any credit card debt or bills I add a reminder to my calendar and to my budget to make sure I stay on top of the monthly minimum and the final pay off. Thus far, about 4 years of use, we’ve never paid a dime in interest to HD.

  30. KJones says:

    I take the view that when stores approach me that they are willing to accept my terms and fill in the card or tell the person my terms: 5% per year, no compounding.

    Their inevitable response is, “Those aren’t our terms!”

    To which I reply, “Then why are you wasting my time by asking? I will only sign on your terms if I approach you for a card. You came to me, so that means you agree to my terms. Otherwise, don’t ask.

  31. Mr. Gunn says:

    balthisar: “increasing your debt ratio”

    Your debt to what ratio? A card with no balance REDUCES your debt to credit ratio. That said, I believe store cards are treated differently from regular credit cards, so it could end up being worse, FICO-wise.

  32. medic78 says:

    These cards sure can be bad, but used correctly, they can be really great.

    I have a fixer-upper house, and a Home Depot credit card. I have never paid interest on any purchases with that card.

    Every few months or so, they send a coupon for no interest, no payment financing for purchases over $299. When we get one, we buy materials for our next few big projects, and then work on them throughout the year while making small payments on it. By the time the year is up, the balance has been paid.

    Works great for me, but if you aren’t careful and you hold the balance for the whole year, ALL of the interest for the whole year gets dumped into the balance.

  33. jbl-az says:

    @wellfleet: I have somewhere around $1500 in deferred finance charges because of a four-year 0% promotion when I bought my home theater / projection TV at Best Buy. I’m religiously careful to pay it off monthly, and my last payment will occur a month or two before the promotion expires, but the thought of what happens if I miss a payment scares me (I know, I should go for automatic payments).

    They very clearly inform me on each statement just how much interest is being deferred until the point at which I screw up. :-)

  34. Alliance to Restore the Republic of the United States of America says:

    Watch out at Neiman Marcus. Brought my purchase to the counter, pulled out my MasterCard USAA World card and was told they don’t accept MasterCard. Pulled out my USAA Platinum Visa and was told they don’t take Visa. Pulled out my puzzled face and was told they only take American Express, check or cash…or a Neiman Marcus card. I had no choice but to sign up with the Neiman Marcus card. What a way to rail people into signing up.

    The upside is that I called, made full payment over the phone and canceled the account in 5 minutes. It was pretty easy.

    Still, I just didn’t like the “gotcha” nature of the whole thing. Hardly anyone uses American Express because hardly any vendor takes it as payment. NM knows this and uses that as a way to get people to sign up on their card. Suffice to say I’ll never shop at NM again.