Holiday Shopping and In-Store Credit Cards

By Dian Vujovich

I was reminded the other day that there’s nothing cheery about the interest rates shoppers are charged when using their credit cards if they don’t pay off their balances in full each month. And especially if the card they pull out of their wallet is a store specific one.

So with the holiday shopping season upon us, let this be a reminder that of all the various types of credit cards issued, those that are store specific come bearing Santa-sized interest rate fees. It doesn’t matter whether the store is say Bloomingdale’s, Saks, Target or Wal-Mart, all of their revolving rates are through the roof.

Just to refresh, a revolving rate means that there’s a credit limit on the amount of money the customer can charge each month. If the balance is not paid in full, the issuer comes up with a minimum payment amount due based upon the store’s interest rate and amount charged, a due date is set and cardholders make payments on their debt until the balance is zero.

I was at Bloomingdale’s this week and learned that they had just increased the interest rate on their revolving card accounts from 23.99 percent to 24.99 percent. Holy snowballs, that’s basically 25 percent. Yikes. Have too much eggnog and forget to pay your bill by its due date, in addition to that hefty monthly finance charge, a late payment fee gets added. In Bloomie’s case it’s $15. Who knows how much that hikes the rate up.

Compare in-store interest rates with those on say national cards like Visa or Master Card, and you’ll find substantial differences. According to creditcard.com, as of November 11, the average interest rates charged on national cards was 12.72 percent.

I checked around to compare the rates on some in-store credit cards and found that at Saks Fifth Avenue, their variable annual percentage rate was 22.90 percent, at Target it’s 22.99 and Wal-Mart, 22.90 percent.

Using credit cards and charging purchases has become a way of life for many of us, and in some cases it’s a necessity. But if you’d like to add some happy Ho-Ho-Ho’s to this shopping season, think twice before using that store-specific credit card. That move could save you a bundle.