GREENSBORO, N.C. — The average interest rate on a credit card is just over 20%, store credit cards are usually higher with some at 30%. But get ready because one store credit card is increasing its APR to nearly 35% and no doubt others will follow.
"So credit card rates have been pushed to record highs in recent months, the national average has jumped about four and a half points since the Fed started raising rates, some cards have jumped even more," said Ted Rossman, Bankrate, Senior Industry Analyst.
The most recent hike comes from Macy's Department Store. The company sent out a letter confirming as of August 15, 2024, the annual percentage rate will be 34.49%.
Consumer experts say others will likely follow with raising rates especially since the Consumer Financial Protection Bureau is pushing to lower late fees. Right now credit card late fees are $32, but the CFPB wants to bring the fee down to $8.
"Store credit cards rely on late fees more than your general-purpose Amex or Capital One card, so a lot of store card issuers have begun pulling other levers to compensate for what may be a drop in late fee revenue," said Rossman.
With rates like 34%, if you're carrying a balance it will be much more expensive to pay it off. For example, if you have a $1,000 balance and you're making the minimum payment, it would take you 58 months to pay it off and cost you an extra $1,047 in interest.
If you can't pay the balance off in full, here are the 2 Wants To Know takeaways:
#1- Look for a new card with a 0% promotional rate, transfer the balance, and work to pay it off.
#2- Call your credit card and negotiate the APR. Bankrate found when consumers did that, 80% of the time there was some wiggle room.