NEW YORK (TheStreet) -- We've all been tempted by the immediate benefit -- save 10% or maybe even 15% on your current purchase when you apply for the store's credit card.
This is not a wise financial move for most consumers.
Most retail stores offer credit cards with interest rates between 23% and 30%, much higher than bank-branded credit cards. According to the LowCards.com Weekly Credit Card Rate Report, the average advertised APR last week among the nation's 1000+ credit cards was 14.04%.
|Store-branded credit cards should be avoided.|
Some cards, such as the Napa AutoCare Easy Pay and the Lane Home Furnishings credit card, are charging a jaw-dropping 30% interest on credit card purchases. Both Goodyear Tire and Rubber (GT) and Zale (ZLC) have a 28.99% APR on their cards; Office Depot's (ODP) Personal Credit Card charges 27.99%; Sears (SHLD) charges 25.24%; and Macy's (M ) credit card has a 24.50% APR.For help sorting through the confusing world of credit cards, visit Lowcards.com. Retail credit cards, also known as private label cards, carry higher interest rates than bank-branded credit cards because they tend to be held by riskier borrowers with fewer credit options. Issuers suffered significant losses on these private label cards during the financial crash of 2008. In fact, General Electric (GE) and Citigroup (C), two of the largest issuers of private label cards, indicated that they wanted to sell off their private label business but both failed to find a buyer. In the past year, default rates have dropped significantly and private label cards with high rates are more appealing for banks and issuers that need the revenue. According to the Wall Street Journal, Wells Fargo (WFC) is considering getting into the private label business. Packaged Facts forecasts receivables for private label card programs to reach $152 billion by 2015 (down from the pre-recession of $156 billion in 2007). There are plenty of reasons to avoid these retail credit cards:
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