High interest rates and increasing credit-card debt make store cards a risky choice

  • Interest rates on store-issued credit cards are high and credit-card debt is increasing
  • APRs on store-issued credit cards currently average a record-breaking 28.93%
  • Consumers are less interested in store cards but not scared off by high interest rates
  • Credit-card debt reached a record $1.08 trillion in the third quarter
  • Store credit cards have looser eligibility standards and higher interest rates
  • Store cards can be beneficial for significant discounts on large purchases and for loyal customers
  • Watch out for retroactive interest on store cards and negative implications for credit scores
  • Buy Now Pay Later services offer interest-free payments but can lead to trouble if not managed properly

Interest rates on store-issued credit cards are at record highs, averaging 28.93%. Credit-card debt has reached a record $1.08 trillion. While consumers are less interested in store cards, they are not deterred by high interest rates. Store credit cards have looser eligibility standards and higher interest rates compared to conventional credit cards. However, store cards can be beneficial for significant discounts on large purchases and for loyal customers. It is important to watch out for retroactive interest on store cards and negative implications for credit scores. Alternatively, Buy Now Pay Later services offer interest-free payments, but consumers should be cautious about managing multiple purchases and falling behind on repayments.

Public Companies: Macy’s (M), Burlington (BURL), Academy Sports + Outdoors (ASO), Michaels (Unknown), Lending Tree (TREE), Klarna (Unknown), Affirm (AFRM), Sezzle (Unknown), PayPal (PYPL), Adobe (ADBE)
Private Companies:
Key People: Ted Rossman (Senior Industry Analyst at Bankrate.com), Matt Schulz (LendingTree Chief Credit Analyst), John Ulzheimer (Credit Expert)

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Factuality Level: 7
Justification: The article provides information about the high interest rates on store-issued credit cards and the potential risks of using them. It includes quotes from experts and statistics to support its claims. However, it does not provide a balanced perspective by including any potential benefits of store cards or alternative financing options.

Noise Level: 6
Justification: The article provides relevant information about the risks and drawbacks of store-issued credit cards, particularly in the current economic climate. It includes expert opinions and statistics to support its claims. However, it lacks in-depth analysis and actionable insights for readers.

Financial Relevance: Yes
Financial Markets Impacted: Store-issued credit card companies and retailers

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the high interest rates on store-issued credit cards and the potential risks of accumulating expensive debt. While there is no extreme event mentioned, the financial markets and companies involved in store-issued credit cards could be impacted by consumer behavior and credit card debt levels.

Reported publicly: www.marketwatch.com