Average interest rates on retail credit cards hit a record high of 30.45%, according to new Bankrate study. Bankrate senior industry analyst Ted Rossman joins Wealth! to discuss why store credit cards have such high rates and how consumers can navigate paying these down. Rossman notes that the Federal Reserve’s interest rate hikes over the last few years have played a role in the high rates on store credit cards. However, he explains that retail credit cards are less selective on credit quality, leading to a bump up in their rates. In addition, he explains many retailers rely on late fee revenue, and with the Consumer Financial Protection Bureau looking to cap late fees, some retailers are raising rates to compensate for lost revenue. The cards with some of the highest rates come from retailers like Petco (WOOF), Michaels, and Big Lots (BIG). Meanwhile, the card with the lowest rate comes from Amazon’s (AMZN) secured credit card, which has a 10% APR (annual percentage rate) and a low credit line. Rossman encourages shoppers to pay their credit cards in full when they can, and moving existing debt to a 0% balance transfer card. These cards allow people to pay off debt with 0% interest for a fixed period of time — usually a year — allowing them to make significant progress on their debt. He also stresses the importance of reading the fine print before signing up for any loyalty programs or rewards cards to ensure you’re not signing up for any credit cards you don’t want.
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