Dozens of retailers jacked up interest rates on store cards ahead of Fed cuts
Dozens of the largest U.S. retailers and their bank partners jacked up interest rates on their store-branded cards to record highs in the months before the Federal Reserve began cutting rates, as the companies looked to pad profits during a stretch of sluggish sales.
Dozens of the largest U.S. retailers and their bank partners jacked up interest rates on their store-branded cards to record highs in the months before the Federal Reserve began cutting rates, as the companies looked to pad profits during a stretch of sluggish sales.
At least 50 companies — including Big Lots, Gap, Petco, Burlington, Macy’s and TJX Companies — increased the APRs on their credit cards between September 2023 and September 2024, according to a review of data gathered by Bankrate.com that examined the nation’s 100 largest retailers.
Bankrupt home goods chain Big Lots raised its APR by 6 percentage points from 29.99% to 35.99% — the largest increase out of the retailers reviewed by Bankrate. Gap made the second largest increase, a 5 percentage point hike on its Banana Republic, Athleta, Old Navy and namesake cards. Petco came in third with a 4.5 percentage point increase.
Big Lots, Academy Sports, Burlington, Michael’s and Petco are tied for having the highest APR among the companies Bankrate tracked, at a staggering 35.99% as of September.
“Up until this rate hiking cycle that we saw from the Fed in 2022 and 2023, 30% was a threshold that few credit cards dared to cross,” Ted Rossman, Bankrate’s senior industry analyst, told CNBC. “But they’ve gone from high to higher these past few years because the Fed pushed rates higher by five and a quarter points and all of a sudden, 29.99% was not the high end anymore. Now we see it’s very common for these store cards to charge over 30%.”
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