Study: Lots of shoppers not wild about store credit cards
Store credit cards are ubiquitous, that doesn’t mean consumers like them.
Seventy-four percent of Americans have had a store credit card — and half of those with a card regretted getting it, according to a new report from CompareCards.com. The study looked at credit cards offers from 50 of the nation’s largest retailers (including brick-and-mortar and online), reviewing 68 cards in all. Of the total, 36 were co-branded and 32 were not.
Most of the cards in the study offered some sign-up bonus or reward. But they came with a high interest rate: The average annual percentage rate (APR) of the reviewed cards was 24.97%. Some cards even went higher — one card had an APR of 30.49%, the highest in the survey, and three others had an APR of 29.99%.
Also, many of the cards came with fine print that could leave cardholders paying far more in interest than they would with other types of credit cards, according to CompareCards.com.
Additional findings from CompareCards’s “2018 Store Credit Card Study” include:
• While the average APR for a store credit card is 24.97%, the average APR that Americans pay on their credit card debt is 16.46%, according to the latest numbers from the Federal Reserve.
• Co-branded retail cards – cards with a Visa, MasterCard, American Express or Discover logo which are used anywhere those cards can be used – had a slightly lower APR (23.20%) than non-co-branded cards. Those cards, which can only be used at a certain retailer or family of retailers, had an average APR of 26.93%.
• Among the most likely to have regretted getting a store card: Parents with kids under 18 (59% said they’ve regretted) and Generation X (59%).
• Fifty-six of the 68 cards (82%) came with some perk for signing up. The most common was a discount (either a set dollar amount or a percentage) on the first purchase with the card. Kohl’s, for example, offers 30% off a first purchase with the Kohl's Charge card, plus another 15% discount when the card arrives in the mail. Home Depot offers a $100 discount on a purchase of $1,000 or more in the first 30 days with its Home Depot Consumer Credit Card.
• More than half of men (53%) said they currently have a store card, while just 41% of women said the same. Men are also more likely to have had a store card in the past but not have one currently. In all, just 21% of men said they had never had a store card, whereas 31% of women said that.
• Half of Americans say they’re “highly unlikely” to apply for a store card this holiday season; 24% said they’re at least somewhat likely to apply for one this holiday season.
• Wealthy Americans are most likely to have store cards and feel burned by them.