Interest in store credit cards plunges

Consumer interest in-store credit cards is on the wane this holiday season.

Only 29% of consumers said they are likely to apply for a store credit card this holiday season compared to 44% in 2020, according to a report from LendingTree. However, consumers are still slightly more likely to use store cards to shop during the holidays versus using a buy now, pay later option.

In other findings, 42% of consumers have closed a store credit card and an additional 13% have had a store card closed by the issuer. The main reasons for voluntary closures were no longer shopping at the store (46%) and high-interest rates (35%).  The average APR on a new retail credit card offer was 24.27%, up very slightly from 2020’s 24.24% in 2020.

“The average store credit card APR is still several points higher than the average for all credit cards,” the report stated,  “For example, we found eight cards from six retailers with APRs of 29.99%. A bit of good news: For the second straight year, no store card that we reviewed had an APR of 30% or higher.”

More retailers offer store credit cards than buy now, pay later loans, though many offer both. Sixty-seven of the 126 retailers’ websites reviewed by LendingTree offered a store credit card, while 56% offered buy now, pay later. However, 42 retailers made both options available. available.

Among Gen Z, 32% said they’d be more likely to use buy now, pay later — the same percentage that would use a store credit card. But only 9% of baby boomers said they’d be more likely to use buy now, pay later, versus 19% who said store credit cards.

• Only one in three consumers with a store card said they currently have debt associated with that card, down from 49% in 2020. 

• Twenty-nine percent of consumers would be more likely to pay with a store card this holiday season, while 21% would turn to buy now, pay later financing.

• Nearly four in 10 people with a store card today have regretted opening one in the past.