Despite Sky-High APRs, Nearly 1 in 3 Americans Plan on Getting a Store Card This Holiday Season
New CompareCards Report Shows Almost Half Regret Getting One in the Past
CHARLOTTE, N.C., Oct. 17, 2019 /PRNewswire/ -- With the average APR now over 25%, store credit card APRs have risen further in the past year, according to a new report from CompareCards.com. But consumer demand for these cards is growing, too, even though about half of retail cardholders have regretted getting one in the past.
Key findings:
- The average APR for a store credit card is 25.41%, up from 24.97% last year.
- Nearly 1 in 3 Americans said they're likely to apply for a store credit card this holiday shopping season, up from 24% who said so last year.
- 8 in 10 Americans either currently have a store credit card or have had one in the past, and 46% of those who have had one have regretted it.
- 43% of millennials with a store card say they use it as their primary credit card. Overall, 31% said the same.
- 15% of those with a retail card didn't realize they were signing up for a credit card. That number jumps to 22% when looking at respondents with a household income under $25,000.
APRs are sky-high and still climbing
It's not just that store card APRs are higher than other credit cards – it's how much higher.
- Average APR range for a store credit card: 23.89% to 26.93%
- Average APR range for all credit cards: 17.18% to 24%
- Overall average APR for a store card: 25.41%
- Average APR for all credit cards: 20.59%
At 25.41%, the average store card APR is up a half of a percentage point from 24.97% in 2018. It may end up decreasing slightly before the end of the year, as some issuers incorporate the Fed's latest rate cut into their cards. However, that's the only reason we'd expect store card APRs to fall. The high rates for these cards seem to be here to stay.
8 in 10 Americans either currently have a store credit card or have had one in the past, and 46% of those who have had one have regretted it
About eight in 10 Americans have a store credit card or had one in the past – and if you have one, you're likely to have more than one. Of those with a retail card, nearly two-thirds (64%) have two or more, including 36% who have three or more. Millennials are the most likely age group to currently have at least one store card (65% said so, compared with 56% of Gen X and 53% of baby boomers).
Nearly half (46%) of those who have had a retail credit card have regretted getting one, and more than a quarter of those with regrets have had them on more than one occasion. Millennials are the most likely to have had regrets, with 57% of that age group saying so, compared with 50% of Gen Xers and just 31% of boomers.
43% of millennials with a store card say they use it as their primary credit card
Nearly half of millennials even say the store card is their primary card, while just 31% of all cardholders agreed. That makes sense because many younger millennials are just getting started with credit cards, and store cards are often a credit newbie's first card.
Nearly 1 in 3 Americans said they're likely to apply for a store credit card this holiday shopping season
Nearly 1 in 3 Americans said they're likely to apply for a new store card this holiday season – up from just 24% last year, with parents of young kids leading the pack.)
15% of those with a retail card didn't realize they were signing up for a credit card
For many people, getting a store card is a spontaneous decision. They were just offered a deal – most likely with some sort of discount off the purchase – and they went for it. However, 15% of those with a store card say they didn't realize they were signing up for a credit card when they applied.
Other highlights:
- Half of parents with kids under 18 carry debt on a retail card, compared to 37% of people overall. They are also more likely than other groups to use a store card as a primary card, have regrets about applying for a store card and say they're likely to apply for a card this holiday season.
- Nearly 90% of cards that offer "special financing" deals charge deferred interest if you don't pay your balance off within the specified time frame.
- 43% have taken advantage of "special financing" deals from a store credit card. Another 22% would consider doing so in the future but haven't yet.
"A store card might be enticing with their discounts and perks, but the higher-than-average APRs can easily outweigh even the best retail discounts," said Matt Schulz, Chief Industry Analyst at CompareCards. "If you're not one to routinely pay off your card balance in full each month, then you should turn down any store card offer. With a 25% APR, the financial risk of overpaying for your purchases are too high."
To view the full report and for more information, visit https://www.comparecards.com/blog/2019-store-card-demand-perception/.
About LendingTree
LendingTree (NASDAQ: TREE) is the nation's leading online marketplace that connects consumers with the choices they need to be confident in their financial decisions. LendingTree empowers consumers to shop for financial services the same way they would shop for airline tickets or hotel stays, comparing multiple offers from a nationwide network of over 500 partners in one simple search, and can choose the option that best fits their financial needs. Services include mortgage loans, mortgage refinances, auto loans, personal loans, business loans, student refinances, credit cards and more. Through the My LendingTree platform, consumers receive free credit scores, credit monitoring and recommendations to improve credit health. My LendingTree proactively compares consumers' credit accounts against offers on our network, and notifies consumers when there is an opportunity to save money. In short, LendingTree's purpose is to help simplify financial decisions for life's meaningful moments through choice, education and support. LendingTree, LLC is a subsidiary of LendingTree, Inc. For more information, go to www.lendingtree.com, dial 800-555-TREE, like our Facebook page and/or follow us on Twitter @LendingTree.
About CompareCards:
CompareCards' mission is to help people make smarter, more informed, healthier financial decisions based on deeper knowledge of financial offers. Each month, over 2.9 million visitors come to CompareCards' website to independently compare credit cards side-by-side and choose a credit card based on interest rate, reward benefit, cost savings, and other factors that are important to each person. CompareCards provides easy-to-use, objective tools and educational resources that help people do everything from making credit card comparisons to managing their credit health. For more information, please visit http://www.comparecards.com.
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