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Credit Card Rates Aren’t Following Federal Reserve Rate Cuts

Why won't credit card firms slash interest rates? Many feel they don't have to cut card rates.

A funny thing happened on the way to lower interest rates – credit card firms aren’t singing from the Federal Reserve song sheet.

“Despite the Federal Reserve cutting the federal funds rate to near 0% earlier this year, many retail card APRs – especially the highest rates at 29.99% – have remained unchanged, according to a new report from “And, despite how consumer-unfriendly these cards can be, more than 2 in 5 (43%) U.S. adults have applied impulsively for one at checkout.”

Historically, credit card rates aren’t strictly tied to bank interest rates, but the lack of a decline in rates is a surprise. Theoretically, credit card companies aren’t slashing rates because they don’t have to – people will use them to pay for goods and services anyway.


The report also shines a much-need light on credit card rate activity.

  • Overall, the average retail credit card rate fell to 24.43%, down from 26.01% last year. However, the average store-only card APR is even higher than that (25.90%, down from 27.52%), while the average cobranded card interest rate checks in at 22.00% (down from 23.39%). Using the same methodology (averaging the high and low APR), the national average for all non-retail cards is 19.69% (21.10% last year).
  • Store-only cards from Big Lots, Discount Tire, Jared The Galleria of Jewelry, Kay Jewelers, Piercing Pagoda, Sterling Family of Jewelers, and Zales all share the highest interest rate of 29.99%, and all remain unchanged from last year.
  • The lowest APRs are offered by the Military Star Card (10.24%), the Sears Home Improvement Account (14.40%), the Costco Anywhere Visa by Citi (15.24%), Apple Card (10.99% to 21.99%, which averages to 16.49%), and the Dillard’s American Express Credit Card (9.99% to 24.99%, average 17.49%).
  • Overall, 62% of U.S. adults have applied for a retail card at some point, and 69% of those have done so impulsively at checkout at least once.
  • Among those who applied for retail cards, the most common reason was to get a discount/promotional offer (60%). The ability to finance a purchase over time was a distant second (29%), followed by “I applied to build my credit score/history” (26%) and “because I love the store” (20%). 8% applied because they felt pressured by the store or an employee, and 7% mistakenly thought they were applying for a store loyalty card, not a credit card.

Although retail card interest rates remain much higher than general-purpose cards, it’s also common to get a sizable discount (often 10-25%) off your first purchase after signing up. That can be well worth it, says Ted Rossman, credit card analyst at

“Some retail cards offer compelling rewards programs. Amazon, Target, Walmart, Best Buy, Lowe’s, and others give cardholders 5% cashback,” Rossman says. “Some retail cards also dangle incentives like special discounts, exclusive cardholder events and/or free shipping."

"If you value these perks and avoid interest by paying in full, then a store credit card can make sense.”