Average APR on store-branded credit card exceeds 30% – are they worth it?

SALT LAKE CITY — At the register when you’re about to pay, saving 15%, 20%, or even 30% on your purchases by opening a credit card with the store sounds like a great deal. But you may want to think twice. Store-branded credit cards will cost you a lot more than a traditional credit card if you’re unable to pay it off right away.

According to new data shared with the KSL Investigators from LendingTree, the average APR for a new store credit card offer is now 30.78%. That’s about a point-and-a-half higher than last year, more than four points higher than in 2022, and a whopping six-and-a-half points higher than in 2021.

“It’s just crazy high,”  LendingTree’s Chief Credit Analyst Matt Schulz said.

He said despite rising rates, consumer interest in store cards grew in the past year. Nearly 3 in 10 consumers are at least somewhat likely to apply for a store credit card this holiday shopping season to enjoy the discounts and other perks.

“A store card can be a good deal if you’re 1,000% certain that you can pay that balance off at the end of the month,” Schulz said.

But if you’re someone who tends to carry a balance, it’s going to be a bad deal because any of that money you saved on those purchases will be quickly undone by interest payments.

To be fair, interest rates for most cards have been up since the Fed raised rates.

“Truth is that rates for store cards rose even faster than other types of cards,” Schulz pointed out.

More Americans prefer store cards over “buy now, pay later” offers that some stores are putting out there. But interestingly, LendingTree found the younger the consumer, the stronger the preference for “buy now, pay later.”