Sky-High Credit Card Interest Rates Persist at Retail Outlets
In the financial landscape of 2025, retail card interest rates continue to hover at elevated levels, with the average retail card APR standing at 30.14%. This figure, according to Ben Danner, Senior Analyst of Credit and Commercial at Javelin Strategy & Research, has not shown significant movement despite the Federal Reserve's rate cuts at the end of 2024.
One notable exception is Saks Fifth Avenue's flagship credit card, which has seen a substantial increase in APR over the past year. The card's interest rate has risen from 29.24% to 35.99%. Similarly, retail giants like Victoria's Secret and The Gap offer cards with APRs of 35.99% and 33.99% respectively.
Store-only retail cards, a common choice for many consumers, have an average APR of 31.64%. Co-branded retail cards, on the other hand, hold an average APR of 28.65%. Despite these high rates, store-only retail card originations peaked in 2015 and fell to 16.8 million private-label credit cards last year.
Interestingly, the typical effective annual interest rates for US credit cards can be around or above 20%, as exemplified by Visa cards like Instabank in Germany with approximately 20.6%. However, US market leaders such as American Express and Chase are more renowned for their high bonuses than for having the highest interest rates.
The Military Lending Act, which imposes a 36% APR cap for active service members, has effectively become a de facto ceiling for all credit cards. As interest rates are tied to the prime rate, they will drop as the prime rate decreases, as Danner stated.
In contrast, the average interest rate for all credit cards stands at 20.12%. This figure, however, does not reflect the higher rates associated with retail cards.
Meanwhile, the 30-year fixed-rate mortgage rates have fallen from a peak of 7% in January to 6.35%. This decrease, while significant, has not had a noticeable impact on retail card interest rates.
As we move forward, it appears that retail credit card rates will remain relatively high compared to other credit card products. Consumers are encouraged to be mindful of these high rates when considering retail credit cards and to seek out the best possible deals to manage their financial obligations effectively.
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