Macys, other big retailers hike store-branded credit card rates as holidays ramp up
At least 50 major retailers have jacked up interest rates on store-branded credit cards to all-time highs — even as inflation continues to dog shoppers nationwide, according to an explosive new study.Big chains including Macy’s, Gap, TJ Maxx and Petco hiked APRs on their store-issued credit cards before the Federal Reserve began slashing rates in September, according to a CNBC report that was based on Bankrate.com data.The retailers are pushing rates to 30% and above — an all-time record that breaks an unspoken APR maximum of 29.99% for the first time in years.That’s despite the fact that economists expect the government’s lending rates to ease further in the coming months.While there are no federal caps on rates, companies are required by law to clearly post and alert customers to changes.
Experts are advising shoppers to think twice before signing up for new cards in the thick of the holiday season.“If you get offered one of these this holiday season, really take a breath.I would just say no if you’re going to carry a balance,” Bankrate analyst Ted Rossman said.
“We hear many times people sign up for these cards and they don’t even realize what they’re getting into.” Discount retailer Big Lots – which filed for bankruptcy in September – raised its APR by 6 percentage points from 29.99% to 35.99%, the largest increase of the 100 retailers analyzed by Bankrate.Gap made the second-largest increase, raising the rate on its Banana Republic, Athleta and Old Navy cards by 5 percentage points to 34.99%.Petco came in third with a 4.5-percentage-point hike to 35.99%.The moves look like a bid by major retailers to maximize profits as the crucial holiday season ramps up.
Nearly half of Macy’s operating profits in 2022 came from its credit card program, according to a 2023 report by Citi analyst Paul Lejuez.In May, Macy’s raised its full-year forecast on credit card revenues “due to better-than-expected profit share resulting from higher b...